Scrap may be defined as “the incidental residue from certain types of manufacture usually of small amount and low value, recoverable without further processing.” For example, outlined metal from turnings, borings, saw dust, short lengths from wood work operations and iron dust from machines and foundry works, etc
For controlling or minimising scrap, proper standards for scrap should be fixed in advance of actual operations and records in the form of Scrap Reports should be prepared and preserved for future references
Scrap can be of three types
(a) Pre-determined or Anticipated Scrap is fixed in advance at the time of anticipation of costs.
(b) Administrative Scrap occurs due to obsolete design of a product.
(c) Defective Scrap takes place due to basic defects in raw materials, production processes and other discrepancies leading to unsaleable products.
‘Defectives’ signify units or portion of production which can be rectified and turned out as good units by the application of additional materials, labour or other services. Defectives arise due to sub-standard materials, inadequate equipment, inefficient supervision, defective planning and poor workmanship, etc.
Usually, it is possible to avoid defects in the units produced but to some extent defectives may be unavoidable. The basic difference between ‘defectives’ and ‘spoilages’ is that the former can be sold after rectifying them whereas the latter has got to be rejected or sold as sub-standard or rejected articles.
A “Defective Work Report” is prepared by the inspector specifying information pertaining to defective units, normal defectives, abnormal defectives, and cost of rectification, disposal value of defectives and reasons and actions suggested.