PlantOps BI

KPI Library / Quality

Scrap Rate

Formula: Scrap units (or scrap cost) ÷ total units produced (or total cost)
Typical range: Under 1-2% is typical for mature discrete lines; above 5% usually points to a process capability issue, not operator error

Scrap rate measures the percentage of units, or dollars, produced that are unusable and discarded rather than reworked or shipped. It isolates the waste that never had a chance: material and labor already spent, with nothing recoverable at the end of it.

What good looks like

Mature discrete manufacturing lines typically run 1 to 2% scrap once a process is stable. Rates above 5% almost always trace back to a process capability problem (tooling wear, a marginal spec, an unstable setup) rather than a run of careless operators, even though operator error is usually where the first finger points.

The gaming risk with scrap rate is reclassification. Scrap that gets routed into a rework loop instead of being written off as scrap will never show up in the rate, even though it consumed real labor and machine time to fix. Watch for a rework percentage that quietly climbs while scrap rate holds flat or improves; that is often the same problem wearing a different reason code.

Scrap Rate in Power BI (DAX)

With an hourly production fact carrying scrap units and a linked part cost table:

Scrap Units = SUM ( fact_production_hourly[scrap_units] )

Total Units = SUM ( fact_production_hourly[units_produced] )

Scrap Rate % = DIVIDE ( [Scrap Units], [Total Units] )

Scrap Cost =
SUMX (
    fact_production_hourly,
    fact_production_hourly[scrap_units] * RELATED ( dim_part[standard_cost] )
)

Report scrap in both units and dollars on the same page. A 2% scrap rate on a $3 part and a 2% scrap rate on a $300 part are the same percentage and completely different problems.

Common mistakes

  1. Netting rework back into “good” units. A part that failed inspection and had to be reworked cost real time and material; folding it silently back into good output hides that cost from the scrap number.
  2. Tracking scrap only by piece count. Parts vary enormously in cost, and a piece-count rate can look stable while the dollar impact swings hard between high-cost and low-cost SKUs.
  3. Leaving scrap reason codes uncoded or bucketed as “other.” A scrap rate without a reliable reason code attached is a number you can watch move but can’t act on.