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Establishing a monthly scrap cost target - Page 2

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  Post Number #9  
Old 8th February 2018, 02:21 PM

Total Posts: 8
Re: Establishing a monthly scrap cost target

In Reply to Parent Post by normzone View Post

Two things going on here - how is the scrap number defined, and what are the root causes.

My experience in my last outfit, a computer equipment design and assembly house, saw .5% of sales as a scrap average. After a while others wanted to look at the number differently and took over that calculation, but that remained the average no matter what you called it or how it was figured.

As for reducing that number, you need to have correctable challenges and clearly identified root causes if anything is going to change. At some point after all the low hanging fruit has been fixed, you are left with the inevitable cost of doing business in an electronic environment. But if you can get that low enough and track it accurately, people will be satisfied.
Thanks for your response. I agree and understand that it's not important to get stuck on numbers for too long. It's important to find reasons why we are having these issues in first place. Currently we have a fixed target and implementing various quality tools in containing our scrap cost. Soon, we might have to set a new target to challenge the existing process.
Thanks to Nath2892 for your informative Post and/or Attachment!

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  Post Number #10  
Old 9th February 2018, 10:05 AM
Mike S.

Total Posts: 2,270
Re: Establishing a monthly scrap cost target

On one hand I understand Management's desire for improvement targets, etc. but I am a little surprised that no one on this forum has mentioned Dr. Deming's 10th of his 14 points.
  Post Number #11  
Old 9th February 2018, 11:27 AM
Jen Kirley's Avatar
Jen Kirley

Total Posts: 6,159
Re: Establishing a monthly scrap cost target

For the benefit of our readers, here are Deming's 14 Points. Point 10 is absolutely correct, but needs to be explained: We do need some targets, but the targets should not be used to place people in competition with each other, because we rely on each other to do well as an organization, a system.

Cost of scrap is an effect. There are so many things that can impact it that it makes sense to place emphasis on those things, so defined actions can be specific to the performance indicator and not a reason to say "What, cost of scrap is up again? What's wrong with you??" when a wholly different cause is impacting it this time.

You can have reduction of Cost of Poor Quality as a high level goal IF you break down actionable causes that can be positively correlated with the effects of the actions taken to address the causes. Each of these can have a target if you like, but there is such a thing as over-measuring.

I hope this helps!
Thanks to Jen Kirley for your informative Post and/or Attachment!
  Post Number #12  
Old 12th February 2018, 08:59 AM
Mike S.

Total Posts: 2,270
Re: Establishing a monthly scrap cost target

Any effort you were going to put into setting scrap targets redirect to making a Pareto of the causes of scrap, then attack those causes relentlessly and with help from everyone. The scrap numbers will take care of themselves.

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