Use Your Scrap Waste Metrics to Drive Growth - TigerStop

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Use Your Scrap Waste Metrics to Drive Growth

Getting your manufacturing team to think about scrap waste metrics can be incredibly difficult. After all, scrap is viewed as garbage in most operations, worthless and a complete afterthought. But keeping track of scrap waste and viewing it as lost profits can have a tremendous impact on your business. An organizational paradigm shift is not an easy task. So how should you go about conveying to your team the importance of tracking scrap waste rates? Keep reading to learn how.

 A Very Important Numberuse-your-scrap-waste-metrics-to-drive-growth-tigerstop

Years ago, we had a problem in a company that I worked in. The problem was that we had a horrible rate for shipping orders on time and complete. Without telling any employees, management posted a sign on the main plant entrance that read “SCOTY = 78% for the month.”

The next month, they posted that month’s number. When quizzical faces would look up at the number and ask what it symbolized, upper management simply said, “It is exceptionally important.”

For quite some time, nobody was told what the number was, just that it meant a great deal. People were confused and unsettled, but they started to change some of their behaviors. At first, the number went down for two months. It sank from 78% to 74% to 71%. Uneasy murmurs, “Who is SCOTY?” could be heard in the halls.

People in the organization were worried. And again, more behaviors started to change. Then suddenly, the number started to climb. People were excited, and speculation continued as to what the number meant. When it went up, there was praise from above. Went it went down, there was sadness from above.

This continued on. Management persisted in not disclosing what the number stood for but did say that when it reached 98% then they would let people know. The curiosity amongst employees was tangible. Some expressed frustration, but then the number really started to climb. In a matter of 4 months, it exceeded the 98th percentile. So, with little fanfare, management revealed what it stood for Shipped Complete and On Time, Yeah, or SCOTY.

Tell a Good Joke

TigerStop™  Bulletin Board

So what does this tale teach us? Well, you don’t necessarily have to keep the metrics you’re tracking in your shop a secret. While it’s an interesting human experiment, it’s just as well not to. Your organization may not have problems shipping items complete and on time, but this same tactic can be applied to tracking your scrap waste metrics.

The key is to post, in a highly visible place, the scrap metrics you are tracking. Keep it simple, as i Six Sigma explains, “To derive the most benefit from metrics, it is important to keep them simple. Defining a metric is similar to telling a joke – if you have to spend too much time explaining it then it will not work.”

Explain to your team that the numbers are both for the scrap and for trash. Explain how these cost all of the team and the company significant time and dollars. Maybe they don’t realize that scrap waste actually costs the company a significant amount of money. All of the parts in your scrap bin are incredibly telling and can signify the following:

1. Your organization may have machinery problems.

Are the tools and machinery you purchased to help actually hindering? Are machinery inaccuracies introducing issues on the production floor? Or is your machinery manual, outdated, and/or difficult for your operators to use effectively?

2. Your organization may have purchasing and/or vendor problems.

Are incorrectly sized parts frequently ordered and/or received? Do those go straight to the scrap bin?

3. Your organization may have engineering problems.

Are new designs not being effectively communicated to production? Is this causing incorrect parts to be manufactured?

Wood slab waste from incorrect manufacturing parts

4. Your organization may have operator problems.

Are your saw station operators rushing to fill orders and cutting parts inaccurately? Are they unable to read tape measures efficiently? Or are equipment problems hindering operators from producing parts as quickly as needed?

5. Your organization may have process problems.

Is completely usable raw material being thrown away out of carelessness? Do you have a process in place for storing remnant parts?

6. Your organization may be wasting a considerable amount of time dealing with scrap.

Do you cutoff operators rework parts from the scrap bin?  How much time are you spending processing these parts a second time? Why are parts being reworked in the first place? Accuracy issues? Machine issues? How many man-hours and overtime hours does it take to rework parts daily? Weekly? Monthly? Does reworking scrap affect any processes farther down the line? Do they hold up value-add processes and cause delays in any one department?  Additionally, your organization may be spending significant dollars for scrap waste to be hauled out of the factory.

7. Your organization may have cut list problems.

Are you implementing Back Office Optimization? That is, are batch-based cut lists created in the back office that don’t take into account common changes on the shop floor (i.e., shortages of a given raw material, human error, etc)? Or do you find that paper cut lists are messy and not up-to-date, causing operators to generate incorrectly sized parts?

Whatever your top reasons for wanting to reduce manufacturing scrap, clearly explain them to your team. Once you have outlined all of the detrimental effects of scrap as seen above, then post each month’s metrics and watch what happens. You don’t even have to set a target necessarily. People will start to make small changes that will add up to significant improvements along with your bottom line. Recording your scrap number is the first step in solving the problem.

For more information about how to reduce manufacturing scrap waste in your facility, check out this video from TigerStop.