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Supply Chain KPIs
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Scrap and Rework Costs

Production Schedule Adherence

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Category:  
Operational

Measures the costs associated with defective products that need to be scrapped or reworked.

What it Measures ?

% of total cost due to scrap or rework.

Relevant StakeHolders 

Production, Quality, Finance

Why it Matters ?

Reduces production waste and costs.

In-depth Use Case / Real-world Example

A company manufacturing clothing calculates Scrap and Rework Costs by tracking the cost of defective items that need to be discarded or reworked. For example, if the company spends ₹1 lakh on reworking defective products and scrapping 200 items, the scrap and rework costs help identify inefficiencies in the production process.

KPI Definition

Business Value

Movement Direction

Sample Formula

Cost of Scrap and Rework / Total Production Cost

Should Aim For
1
2
3
Track Similar KPIs
Packaging Utilization Rate
Measures the percentage of packaging material used efficiently in the production process.
Scrap and Rework Costs
Measures the costs associated with defective products that need to be scrapped or reworked.
Labor Utilization Efficiency
Measures the efficiency of labor usage by comparing the actual output to the labor hours used.
Order Cycle Time
Measures the total time taken from receiving a customer order to delivery.
Line Stoppage Incidents
Measures the number of times production is halted due to machinery failures, material shortages, or other issues.
Transit Time Efficiency
Measures the efficiency of the transportation process by comparing the planned and actual transit times.
Outbound Freight Lead Time
Measures the time taken to ship products from the company’s warehouse to customers.
Inbound Freight Lead Time
Measures the time taken to receive goods from suppliers after shipment.
Production Plan Adherence
Measures the extent to which the production schedule is followed and completed on time.
Order Picking Accuracy
Measures the percentage of items picked correctly for customer orders.
Production Downtime
Measures the total time production is halted due to machine failure, maintenance, or other reasons.
First Pass Yield (FPY)
Measures the percentage of products that are manufactured correctly the first time, without defects.
Pick-and-Pack Cycle Time
Measures the time it takes to pick and pack an order from the warehouse.
Work-in-Progress (WIP) Inventory Trends
Measures the trends in inventory that is in the production process but not yet completed.
Return Rate (Defects/Quality Issues)
Measures the percentage of products returned due to defects or quality issues.
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