Scrap or process wastes are either process wastages or defectives which cannot be used in their present conditions. If it is defective, it may be reworked, but the cost of such rework may be uneconomical. So, it may be more economical to salvage it and get the best value when discarded.
image source: 4cu9kbglzjq2812c7499ndc9vj.wpengine.netdna-cdn.com
Certain process wastages such as, turnings, borings, etc. may not have any end use in the plant, but they may have a good market value. Here also materials control must use the facilities provided by purchasing as a coordinator in order that scraps are sold for best value.
Categories of Scrap Materials:
The categories of scrap materials are as follows:
ADVERTISEMENTS:
1. Spoilage
2. Scrap tools
3. Wastage
ADVERTISEMENTS:
4. Empties
5. Irreparable parts of equipment
6. Obsolete items
7. Turnings, boring, etc.
ADVERTISEMENTS:
8. Used oil.
1. Spoilage:
Items which are spoiled during the course of manufacturing or storage are called spoilage. Spoilage in manufacturing involves loss of machine hours as well as many hours. Special care should also be taken to avoid spoilage during storage. In both cases of spoilage, the items will be covered by scrap notes.
2. Scrap Tools:
Some tools are out after a period and some break during usage. They are written off from stock by scrap note and sold as scrap metal. Care should, however, be taken to properly store such scrap tools lest they may be exchanged for new ones by some one or the other.
3. Wastage:
Pieces cut of raw materials during manufacturing process are called wastage. The wastage is normally included in the quantity issued and is therefore debited to the job. Raw materials should be purchased in economic sizes to keep wastage at the absolute minimum. In certain cases, wastage can be reduced by intelligent handling of issues from stores.
For example, if there is a requisition for a piece of (1/2) M x (1/2) M size steel sheets, it should be issued from cut pieces if available instead of from a large sheet. Similarly, a lm x 1/2 m piece should be issued from 2m x lm sheet instead of from 3mx 1 ½m sheet, and so on.
4. Empties:
Empty drums, bags, packing case etc., which are not returnable to suppliers, are treated as scrap and sold.
5. Irreparable parts of equipment:
Certain parts of equipment become irreparable after some years. Examples are crankshaft, connecting rods, bearings etc. of an engine. Replacement is taken from stores on requisitions and the old ones are thrown into the scrap dump and sold by weight (scrap bearings and similar spares should be broken up lest they should get into sales channel again).
6. Obsolete items:
Obsolete components which cannot be sold as spares and therefore written off from the financial books are sold as scrap.
7. Turnings, boring, etc:
When operations such as turnings, borings, drillings, etc., are carried out on metal bars, sheets components, etc., a certain portion of the metal is removed by such operations. Similarly, saw dust and wood cutting are obtained when wood is cut. Such arising are stored separately and sold as scrap.
8. Used oil:
In many factories, there are arising of used oil as a result of operating machine tools etc. They are sold as ‘scrap’ often along with the drum.