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How to reduce rework and scrap to improve cash flow

Any amount of scrap or rework generated in your operations points to an opportunity for improvement. The biggest challenge is discovering the root cause of the issue so you can make the improvements that that will help you to achieve 100% Quality.

How Scrap Hurts the Bottom-Line?

To reduce the Conversion cost &Cost of inventory, you have to reduce the waste.

Reducing rework and scrap from occurring can generate money that goes right to your bottom line.

Scrap and Rework Affect the On-Time Deliveries Customers Expect

Any time you experience defects in your production that generates scrap or rework your chances of attaining on-time delivery diminish. Future production also suffers, as while you complete the rework, the job you should have been working on becomes the next job in line. So now that job’s on-time capability is affected as well, potentially upsetting customers who expect on-time delivery. It’s a negative geometric progression that gets worse over time.

Finding the Root cause of Scrap and Rework

To get to the root cause of the rework and scrap, we conduct Root Cause Analysis – an analytical, systematic approach to define, identify and solve problems by seeking out the origin of the problem.

There are many tools associated with RCA including fishbone diagrams, Pareto Charts, cause and effect diagrams, failure mode and effects analysis (FMEA), and Kaizen, to name a few. The objective is to define the problem, collect data to substantiate the problem, identify possible causes, and identify the root cause, and recommend – and implement – solutions. Asking a simple “why” is often not enough to delve deep into the root cause and create a permanent working solution. We need to ask that question several times over to get to the true root cause of what’s causing the defects and rework. The exercise of “The Five Whys” is a continuous improvement technique used to reveal an issue’s root cause.

Developing a Proactive System

Figure of Eight (JIPM-JAPAN) is a proactive system helps to sustain the Quality and reduce the scrap. For further details, please contact us