Routing Scrap Factor?

  • Routing Scrap Factor?

    Posted by Deb Peters on May 2, 2024 at 1:39 pm

    Our team is attempting to use the “scrap factor” on our routings, however, we do not really know what the expected result of using should be. Currently we manually add excess into the BOM, which in turn increases the standard cost. Then when we don’t consume all of it in production, we get material variance.

    How does the “scrap factor” field on a routing work?

    Does it help planning/purchasing? If so, how?

    Does it create any general ledger entries?

    Does it affect the standard cost on a BOM?

    If we keep the standard cost the same but add 5% as a scrap factor, where does it go or how does it function?

    Steven Chinsky MVP replied 2 weeks, 6 days ago 2 Members · 5 Replies
  • 5 Replies
  • Steven Chinsky MVP

    Member
    May 2, 2024 at 4:07 pm
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    @debpeters Scrap Factor % on the Routing Line is defined as scrap in relation to an operation. BC has a scrap factor % field in the routing that can be used to define if an operation generates scrap. This will increase the required quantities for all the components that are used in the operation and all previous operations. It will also increase the capacity need for the operation and all previous operations. If you use this then linking the components to the operations using the routing link codes are important (otherwise all your components will have increased quantities).

    When the production order is created the value of the Scrap Factor % field from the routing line is transferred to the Scrap Factor % field of the production order routing and the capacity need for the operation is increased accordingly. The related components quantities are also increased accordingly. A great example of why to use this is operations that have a certain
    expected failure rate.

    Now Fixed Scrap Quantity on the Routing Line Scrap is related to an operation that has defined fixed scrap quantity. Dynamics NAV has a fixed scrap quantity field in the routing; it has the same effect as the scrap factor % but with the difference that it is specified in an absolute quantity instead of a percentage.

    You set this up in the Fixed Scrap Quantity field on the routing. When the production order is created the value of the Fixed Scrap Quantity field from the routing line is transferred to the Fixed Scrap Quantity field of the production order routing and the capacity need for the operation is increased accordingly. The related components quantities are also increased accordingly. This could, for example, be used for operations on a machine that needs to be setup and tested on a few units before starting the run. Another common example is if you are doing some destructive testing on a certain quantity as part of the operation.

    I hope this helps. Now one thing to note, if you intention is to solely scrap at the component level, then setting the Scrap % on the BOM is the best approach.

    Thanks,

    Steve

  • Deb Peters

    Member
    May 2, 2024 at 8:46 pm
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    Thank you Steve. We might be looking to use it for components or raw material only. We are interested in making sure purchasing/planning buys enough materials. Also, does this change the standard cost of the production item when the scrap factor is added in either the routing or the BOM?

    • Steven Chinsky MVP

      Member
      May 2, 2024 at 9:07 pm
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      @debpeters If you are looking to apply against components (Raw Materials) only, then I would use the Production BOM Scrap %. This way you are always pulling x% more than the stated Quantity per for the components. As for MRP, scrap % effects the expected quantity required for a Production Order and therefore is used in the planning engine. Your last statement about Standard Cost, if your Costing Method is Standard Cost and you have the Production BOM reflecting a Scrap%, when you rolled the Standard Cost the additional item cost will be included.

      Hope this helps.

      Steve

  • Deb Peters

    Member
    May 3, 2024 at 8:52 am
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    Thanks, Steve. We’ll look at the BOM Scrap %. One more follow up question: if for example we have $100 material and add 5%, then $105 of material will be in the standard cost and also issued to the production order and if they only consume $85 worth of material, does $20 go to favorable material variance?

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