Scrap and rework are silent margin killers. Most job shops know they have waste, but few know exactly how much it costs them. Without tracking, scrap stays invisible — and invisible problems do not get fixed. For a complete overview, see our manufacturing execution system software guide.
The True Cost of Scrap
Scrap cost is not just material waste. It includes:
- Material cost: The raw material that was consumed and scrapped
- Labor cost: The operator time spent producing parts that will not ship
- Machine time: Equipment capacity used on scrap instead of good parts
- Rework labor: Additional time to fix or re-run defective parts
- Delivery delays: Late shipments because scrap reduced your effective output
- Customer trust: Quality issues that erode confidence over time
For a typical job shop with $2M in annual revenue and a 5% scrap rate, the true cost of scrap can exceed $100,000 per year when all factors are included.
Use our free scrap cost calculator to estimate your own shop's scrap cost.
5 Steps to Reduce Scrap in Your Job Shop
1. Start measuring scrap consistently
You cannot reduce what you do not measure. Track scrapped parts by job, machine, material, and reason. Even simple tracking reveals patterns you did not know existed.
2. Identify your top scrap sources
Once you have data, look for the Pareto pattern. Usually 20% of your jobs or machines account for 80% of scrap. Focus improvement efforts there first.
3. Add in-process quality checks
Do not wait until final inspection to find problems. Add quality checkpoints at key process steps so defects are caught early, before more value is added to a bad part.
4. Track first-article inspection results
First-article failures are a leading indicator of scrap on the full run. Track and analyze first-article results to catch setup and process issues before they produce scrap.
5. Make scrap data visible to the team
When operators can see scrap rates and trends, they naturally pay more attention. Visibility creates accountability without requiring a punitive culture.
How FactoryOS Helps
FactoryOS makes scrap tracking simple for job shops:
- Operators log scrap from any phone or tablet
- Scrap is tracked by job, machine, material, and reason
- Quality checklists catch issues in-process
- Dashboards show scrap trends and costs in real time
- Reports help you identify and fix root causes
A strong quality control checklist is one of the most effective ways to prevent scrap in the first place.