8% Scrap Is Not Just a Quality Problem

If 8% of your production becomes scrap, the loss is not limited to 8% of your material. You have already spent machine time, operator time, energy and production capacity creating products you cannot sell.

Imagine a production line scheduled to manufacture 10,000 parts during a shift. At an 8% scrap rate, 800 parts do not become sellable products. The obvious loss is the material used to produce them. But those 800 parts also occupied the machines, consumed production time, required operator attention and used energy. If additional production is needed to replace them, the same resources must be used again. This is why scrap should not be viewed only as a Quality department problem. It is a production performance problem with a direct effect on capacity, OEE and ultimately business results.

What does 8% scrap really cost your production?

The cost of a rejected part begins long before somebody places it in the scrap container.

Suppose a component contains €4 of material. Eight hundred rejected parts would represent €3,200 of material. But that calculation captures only one part of the loss.

The factory has also invested production resources into those components:

·      machine and operator time;

·      electricity and other process resources;

·      tool and equipment usage;

·      inspection and handling;

·      additional production required to replace rejected quantities.

If each part requires an average of 30 seconds of machine time, producing 800 rejected parts consumes approximately 6.7 hours of machine capacity.

That capacity cannot be recovered simply by removing the defective parts.

The machine has already spent the time.

What happens if scrap falls from 8% to 2%?

Reducing scrap does not only save material—it releases production capacity.

Consider the same illustrative production volume of 10,000 parts.

Production result	8% scrap	2% scrap
Produced parts	10,000	10,000
Rejected parts	800	200
Good parts	9,200	9,800
Scrap material at €4/part	€3,200	€800
Machine time spent on scrap*	6.7 h	1.7 h

*Illustrative example based on 30 seconds of machine time per part.

Reducing scrap from 8% to 2% therefore saves 600 parts per 10,000 produced, approximately €2,400 in material in this simplified example and around five hours of machine capacity.

And that is before considering labor, energy, tooling or the cost of producing replacement quantities.

The real question therefore becomes more interesting than “How much does our scrap cost?”

It becomes:

“What else could we produce with the capacity currently being used to produce scrap?”

Why does scrap affect OEE?

OEE does not consider a machine effective simply because it is running—it needs to produce good products at the expected speed.

Overall Equipment Effectiveness combines Availability, Performance and Quality. Scrap directly reduces the Quality component because only good products contribute to fully effective production.

A machine may have excellent Availability and operate close to its expected cycle time, yet its OEE can still be significantly affected if too many products are rejected.

This is an important distinction for production management.

A machine can look busy for the entire shift while part of that time creates no sellable output.

An OEE software solution makes that loss visible. But, as with downtime, the percentage alone is only the beginning. The next step is understanding where, when and under which production conditions the scrap was created.

Is the scrap really random?

When quality losses are connected with production data, patterns that previously looked random may become visible.

Suppose the overall scrap rate is 8%. Looking only at the daily percentage does not tell us much.

Production Management allows us to ask more useful questions.

Does the scrap increase on a particular machine? Does one product variant generate more rejected parts? Does the rate increase after a changeover? Is one work order consistently associated with poorer Quality? Did the problem begin after a maintenance intervention or process adjustment?

The average may be 8%, while the underlying production data reveals something like:

Product A: 2.1%
Product B: 3.4%
Product C: 11.8%

Now the problem looks completely different.

Instead of launching a general quality initiative across the entire factory, the team knows where to investigate first.

Why should Quality, OEE and Production Management use the same data?

A rejected part is simultaneously a quality event, an OEE loss and a production event.

When these perspectives remain separated, finding the root cause becomes more difficult.

Production may know which work order was running. The machine provides operating information. Quality knows which parts were rejected. Maintenance knows whether an intervention occurred. OEE records the resulting Quality loss.

A connected MES system can bring this information into the same production context.

This enables teams to compare the rejected product with the machine, work order, production period and other relevant events rather than treating scrap simply as a total at the end of the shift.

For Lean Manufacturing and Kaizen, this is particularly important. Continuous improvement depends on identifying recurring losses precisely enough to remove their causes.

What does traceability change?

Knowing that 800 parts were rejected is useful. Knowing where those 800 parts came from is considerably more valuable.

Production traceability can help reconstruct the conditions surrounding a quality problem.

Depending on the manufacturing process and available data, this can include the product, work order, machine, production time, relevant process events and other information recorded during manufacturing.

This becomes especially valuable when a problem is discovered later.

Instead of asking “What happened sometime yesterday?”, teams can investigate the production history associated with a specific order or product.

Machine traceability and production traceability therefore support much more than compliance. They provide the context required to understand recurring production losses.

Can Factory Intelligence find patterns people miss?

Once production and quality data are connected, historical information can become the foundation for deeper analysis.

Imagine that scrap increases only when several conditions occur together: a particular product is manufactured on Machine 4, cycle time begins to vary and the process has been running continuously for more than six hours.

Each variable may look normal when analyzed independently.

Together, they may reveal a pattern.

This is where Factory Intelligence can build on the data already collected through Smart Manufacturing. AI-based analysis can search historical production information for relationships, anomalies and recurring conditions that deserve further investigation.

The objective is not for AI to declare why a part is defective without evidence.

It is to help production and quality teams find where they should look.

How does TAP Smart Factory connect scrap with production performance?

TAP Smart Factory is a modular MES system for real-time production monitoring developed by T3Soft.

Production Management, OEE, machine information, Reporting and other available production data can provide different perspectives on the same manufacturing process. TAP Smart Factory is not an ERP solution; it can complement systems such as SAP and Microsoft Dynamics 365 Business Central (formerly Navision) while communicating with machines, PLCs, sensors, cameras, printers and other production equipment.

This creates a connected Smart Factory environment in which quality losses can be analyzed as part of overall production performance rather than as an isolated percentage.

If scrap falls from 8% to 2%, the result is not simply 6 percentage points less scrap.

It can mean 600 more good products from every 10,000 produced, less wasted material, fewer replacement quantities and hours of production capacity returned to the factory.

Because scrap is not only something you throw away.

It is production capacity you already paid for—and received nothing in return.