Scrap as a percentage of sales is an interesting metric since it
somewhat maps to PBITDA as variations in the selling price - discounting
etc will both impact the scrap value as a sales percentage as well as
the profit figure. Unfortunately so will a lot of other things such as
overhead allocation, market conditions, sales efficiency, marketing
effectiveness etc.
To be realistic, it should be disconnected and measured as a dollar
value which can then be compared as a percentage of the of the cost of
goods produced for any given period, since that is actually what is
being affected by the scrap rate.
To be honest if the scrap rate was ever directly impacting sales it
should have stopped manufacturing some while back.....8-)
John
John Burke
Senior Manager - Operations , Optichron
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-----Original Message-----
From: TechNet [mailto:[log in to unmask]] On Behalf Of Kevin Glidden
Sent: Wednesday, April 19, 2006 10:33 AM
To: [log in to unmask]
Subject: Re: [TN] How are PCB & Assembly manufacturers measuring scrap?
I too have seen SCRAP recorded as a percentage of sales. I am not a
Quality
Engineer, but I never fully understood / agreed with this methodology.
For
one, over a given time period, sales could be low, but scrap high, or
vice-versa, so the metric is not consistent. Also, doesn't it depend on
the
cost of your products and qty of sales? If your items cost $5k, and you
only sell one a month, and it gets scrapped, you have 100% of sales! As
a
percent of production seems more reasonable to me. I also struggle with
the
"target" scrap rate. If your scrap target is X% of sales or production,
does that mean there is an acceptable level of scrap? In some perfect,
mythical world (with free Mountain Dew and endless puns) shouldn't the
goal
be NO scrap???
-----Original Message-----
From: TechNet [mailto:[log in to unmask]] On Behalf Of
[log in to unmask]
Sent: Wednesday, April 19, 2006 11:51 AM
To: [log in to unmask]
Subject: Re: [TN] How are PCB & Assembly manufacturers measuring scrap?
Brian Guidi wrote:
>Good morning folks,
>
>We've had some lively discussions regarding the best ways to measure
>scrap within a manufacturing operation. What are some common ways of
>characterizing and measuring accurate scrap levels?
>
>Also, I know this next one is a loaded question but I'll fire it off
>anyway. When scrap is measured as a percentage of sales, what values
>are typical within this industry? One percent? Five percent? Is there a
>significant difference between the value one would anticipate for a
>board fab shop versus an assembly operation?
>
>Brian Guidi
>R&D/Quality Systems Specialist
>Teledyne Printed Circuit Technology
>Tel: (603) 889-6191 X:310
>Fax: (603) 886-2977
>E-mail: [log in to unmask]
>
>Visit us @ http://www.tetpct.com
>
We're an assembly operation and measure raw $$ amounts of scrap. We set
a
goal of 20% reduction in scrap/year (we started off with a lot of $$
thrown
out in the dustbin). Now that we are down below $3K/ month, we will be
starting to report as a % of total production,although in previous
places
scrap was often reported as a % of sales. What's typical would probably
depend on the particular normal yield of the item you are producing, as
something like wafer dies might have a higher scrap rate than 2 layer
PCBs.
John Burris
Mfg. Eng. Mgr.
Automated Logic/UTEC
770.795.4827 (O)
770.795.3527 (F)
[log in to unmask]
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