Let's look today at Scrap Rate. Let’s get started. Material Requirements Planning is an essential process in manufacturing, helping companies ensure they have the right materials, in the right quantities, at the right time. One crucial factor that can significantly impact MRP is the scrap rate. So, what exactly is the scrap rate? Scrap rate or scrap factor refers to the percentage of materials that are expected to be scrapped or discarded when received from a vendor, during the manufacturing process or upon completion. This can be due to defects, errors or inefficiencies. This could be due to a variety of reasons such as machine errors, human mistakes, or material flaws. Zero quality control, mistake proofing and poka yoke are valuable ways to reduce your scrap rate. Managing the scrap rate effectively is crucial for optimizing costs and maintaining production efficiency. The scrap rate is generally shown as a decimal value and can sometimes be converted to a percentage. The scrap factor plus the yield factor will add up to 1. How scrap rate impacts MRP Let's look a little closer at how scrap rate impacts Material Requirements Planning. Imagine you are manufacturing a widget that requires 100 units of raw material z, but due to a 5% scrap rate, you end up losing 5 units in the process. This means you actually need to order 105 units of raw material z to ensure you have enough to meet your production goals. Calculating Scrap Rate
Why is Scrap Rate Important to MRP? Turning your cheek to the scrap rate can lead to shortages in materials, delays in production, and ultimately, higher costs. By factoring in the expected scrap, you can maintain a smoother production flow and avoid these issues. So, what are the benefits of inputting, managing and accounting for scrap rate in your MRP:
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June 2024
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