How Automotive Suppliers Can Address Scrap Accounting Requirements

There is a step in a manufacturing operation before quality investigates a defective part for root causes, Pareto charts, and the subsequent corrective action in the Quality Management System. That step is merely to separate the possible defective parts from those qualified to move to the next step, or to the customers receiving dock.

This move to a “disposition” stage is part of a beginning scrap accounting process. What’s really cool is that if something is in disposition it can be reclassified in several ways to move it out or into the production flow. The parts can be:
1. Held in disposition
2. Determined to be scrap with xx reason
3. Moved back into WIP at step ZZ
4. Moved into rework
5. Actioned by a customer defined activity

Sound simple enough? Let’s consider the real world issues. First of all, not all parts are scrapped for the same reason. A single basket of parts may have some “scrap A” parts, some “good” parts and some additional “scrap B” parts, and some rework parts Had enough? There is more. Let’s consider the impact of Lot Control on not just one basket, but several baskets under investigation for possible defects. Finally, for those who are not familiar with the PPM [parts per million] defect threshold of six or less, this is one way of how you arrive at this incredible quality standard.

These increased scrap complexities make it essential that the automotive supplier have a software system that can handle the analysis, reporting, and tracking of dispositioned goods. Perhaps one like AIM Vision that provides for barcode-based material and container tracking of raw material, semi-finished goods, and finished goods inventory, including a barcode-based production entry, and specialized modules that capture scrap and labor efficiency from the plant floor and provide a range of reports that deliver visibility into man, material, and machine movement and utilization.

If you are an automotive supplier or are working with an automotive supplier who needs to address scrap accounting requirements, contact AIM Computer Solutions, Inc.
We are a Michigan Microsoft Certified ISV and ERP Partner with automotive-centered ERP and SCM solutions that are Certified for Microsoft Dynamics GP.