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Manufacturing KPI Dictionary
Scrap Rate: definition, formula and manufacturing interpretation
Understand scrap rate and how to use it in manufacturing analysis.
Scrap Rate
Scrap Rate
Formula: Scrapped output ÷ total output
Use the KPI with product, plant, customer, supplier and period context where appropriate. Connect changes to operational and financial drivers.
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Practical interpretation and manufacturing use
Scrap rate measures the share of production or material that is rejected or discarded. Scrap can affect material cost, labor efficiency, capacity and margin.
Formula
Scrap Rate = Scrap Quantity ÷ Total Production Quantity × 100
How to use this KPI
- Segment scrap by product, line, material, shift or cause.
- Quantify the financial impact of scrap rather than monitoring percentage alone.
- Track recurring causes and corrective actions over time.