Manufacturing & production
Scrap and rework tracking: measuring and reducing quality losses
How to record scrap and rework at the source, calculate scrap rate, first-pass yield and cost of poor quality, and run a reduction program on the floor.
Scrap is material or product that cannot be used and is discarded. Rework is product that fails a check but can be fixed with extra work. Both cost money: materials, labor, machine time and sometimes late deliveries. In many plants they are also the least accurately recorded numbers, because nobody likes reporting waste. Tracking them honestly is the first step to reducing them.
Key measures
| Measure | Formula |
|---|---|
| Scrap rate | Scrapped quantity ÷ total quantity produced (or input) |
| Rework rate | Reworked quantity ÷ total quantity produced |
| First-pass yield (FPY) | Units good the first time ÷ units started |
| Cost of scrap | Scrap quantity × (material + labor + overhead per unit at that stage) |
| Cost of rework | Rework hours × labor rate + extra materials |
Example: a line starts 10,000 units. 9,200 pass first inspection, 500 are reworked and pass, and 300 are scrapped.
- FPY = 9,200 ÷ 10,000 = 92%
- Rework rate = 500 ÷ 10,000 = 5%
- Scrap rate = 300 ÷ 10,000 = 3%
If each scrapped unit carries ₱85 of cost by that stage, scrap costs ₱25,500 for the run.
Record at the source
- Record scrap and rework at the work center where it is found, during the shift
- Use reason codes: material defect, machine setting, operator error, tooling, handling damage, startup scrap
- Record the stage: scrap at the end of the process costs more than scrap at the start
- Keep physical scrap bins per line so quantities can be verified
- Link scrap to the job order so job costs are accurate (job order costing)
Startup and changeover scrap
Many lines produce scrap during startups and changeovers while settings stabilize. Track it separately: it is often a large share and responds well to standard settings and faster changeovers (SMED).
Reducing scrap and rework
- Pareto scrap by reason, product and line (root cause analysis tools).
- Attack the top cause with a focused project (DMAIC or A3).
- Standardize settings that produce good parts.
- Check incoming materials where supplier quality is a cause (quality control).
- Train and mistake-proof operator-related causes.
- Review weekly and confirm gains are sustained.
Rework controls
Rework can hide problems: if products are always fixed, nobody fixes the process. Control it by:
- Recording all rework, even quick fixes
- Re-inspecting reworked products
- Limiting how many times an item can be reworked
- Tracking rework hours as a cost
Accounting for scrap
Normal scrap is usually part of product cost; abnormal scrap may be recognized as a loss. Scrap that is sold should be recorded with its proceeds. Agree the treatment with your accountant and keep scrap records consistent with inventory (production cost control).
Where Cirquolus fits
The Cirquolus production management system records output on the floor through mobile, line and countertop processing and monitors productivity, performance and cost, with production review and control center follow-up. Improvement projects for scrap reduction can run in the Business Compass improvement portfolio.
Frequently asked questions
What is the difference between scrap and rework?
Scrap is discarded because it cannot be used. Rework is fixed with extra work so it can be used.
How do you calculate scrap rate?
Divide the scrapped quantity by the total quantity produced or started in the period.
What is first-pass yield?
The percentage of units that pass inspection the first time, without rework.
Why is scrap under-reported?
Because it reflects badly on teams. Make recording routine, use physical scrap bins and focus on fixing causes rather than blaming people.
Bring this workflow to a Cirquolus demo.
Show us your current process, companies and branches. We will map it to the modules you need and propose a realistic rollout.