Back to Services

Reducing the Cost of Scrap

With scrap reduction resulting in lower working capital, improved yield, disposal cost savings, reduced double handling and lead times - who wouldn’t want to reduce the cost of scrap? At PIP we help our clients to identify, capture and lock in efficiencies to reduce scrap and other forms of waste - releasing both cash and ongoing savings back to the business.

PIP helps you to tackle the three levers of scrap:

1. Reduce the amount of scrap produced (eliminate the root causes)

• Use mass balance analysis to identify the sources and quantities of scrap by type?
• Prioritise and systematically work from highest to lowest priority
• Generate ideas to tackle the root causes of scrap?
• Drive execution through ideas pipeline and active execution management

2. Reduce the cost of scrap per tonne

There are a variety of drivers of cost and each is tackled in a slightly different way. These can include:

• Increasing the price received for scrap - by negotiation or by enhancing the quality, properties and value of the scrap.
• Reducing the cost of rework or recycling - by altering the rework/recycle process or addition point, altering properties, negotiating lower prices etc.
• Reducing the cost of scrap removal and storage - by altering the properties of the material, finding alternative approaches, or renegotiating price)

3. Hard wire, to reduce amount of (and cost of) scrap

To sustain the improvements and drive continuous improvement it is essential to ‘hard wire’ in to the business the systems, processes, accountabilities, measurement and review that will drive ongoing review and improvement of this lever at the right places in your business.

The wiring work associated with scrap differs by business but can include ensuring reducing scrap is included in individual’s KPIs, that the amount and cost of scrap is measured and reported, that targets are agreed, and that new employees are trained on the causes of scrap and how to reduce it. In addition, procedures associated with prevention, and performances relative to target are reviewed regularly in structured reviews with coaching provided.

Case Example: Reducing Scrap at an Aluminium Extrusion Plant

An aluminium extrusion plant producing aluminium building products such as window frames had high rates of scrap. They had tackled this problem a few times, but had not achieved the results they were looking for.

Our Approach:

We coached a client team to:

• Develop a mass balance to establish facts on the location and size of scrap created in the process. The mass balance mapped out the volumes, inputs and outputs of the process and provided direction on where losses were occurring (as shown)

• Summarise the information in a loss/waste tree (or pareto), ordered from highest to lowest (priorities at the top).
• Determine the root cause of each source of waste (starting with the highest priority first)
• Hold idea generation sessions to find solutions to these root causes
• Map each idea on the value ease matrix to determine the 'precious few' to implement
• Prepare the 'precious few' ideas for implementation (risks, stakeholder input, implementer engagement, write implementation plan with implementer, stakeholder approval)
• Actively manage implementation and ensure changes are locked in
• Hard wire the approaches in an ongoing, continuous improvement system in the area

Business Result: A 50% reduction in scrap - sustained two years after PIP had left

Case Example: Reducing Non-Prime Steel production

A steel producer had higher non-prime coils than target and sought to reduce their occurrence.

Our Approach: We trained the client supervisors and superintendents to:

• Set clear accountability for defects/scrap
• Developed and then continuously revised "Book of Knowledge" that provided operators with improved understand of how the line operated
• Trained staff to identify different defects
• Reinforced Standard Operating Procedures
• Reviewed the defect pareto and focused on top 3
• Rigorously identified the “real” root causes of the defects
• Tracked and actively reviewed results

Business Result: Non-prime product was reduced by 53% (in conjunction with a more than 50% increase in throughput)

Non Prime steel production

Back to top