KPIOperations & Supply Chain

Scrap Rate

Percentage of raw material or finished product discarded due to defects or non-conformance

What is Scrap Rate?

Scrap rate is the percentage of input material that ends up as scrap rather than saleable product. It shows how much material is wasted in production.

Scrap wastes material, labour and energy, so reducing it improves margin and sustainability.

How this KPI is measured

Function
Operations & Supply Chain
Sub-function
Quality Control
Industry
Manufacturing
Type
Lagging
Impact
Quality
Unit
%
Measurement frequency
Daily / Weekly
Formula
(Volume or value of scrap / Total material input) × 100

How to calculate it

Divide the volume or value of scrap by total material input, and multiply by 100.

For example, if 20,000 kg of scrap was produced from 400,000 kg of material, the scrap rate is 5%.

Use the same measure, volume or value, each time, and record causes such as set-up losses, defects and cutting waste.

Where it is used

  • Cutting material cost

    Reduce waste.

  • Improving processes

    Find causes of loss.

  • Supporting sustainability

    Use resources well.

How to improve it

Tips and common mistakes

  • Include both value and volume where useful.
  • Compare like products and lines.
  • Do not hide scrap as rework.

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