It doesn’t matter where I go – scrap is the form of waste most prominent in the minds of manufacturing companies. To my knowledge, steel is the material most roll formed in North America and around the world. In many companies the price of steel is a constant concern, because it can fluctuate wildly and it’s frequently the single biggest cost when it comes to calculating margin. I’ve seen companies make more money buying and re-selling coils than they could by turning that coil into finished product and selling it to their customers – at least when the market was particularly volatile.
I think the main reason companies focus on scrap is because it’s right there. You can see it, touch it, smell it, and weigh it. There’s a problem with the focus on scrap, because its usually not the biggest contributor to waste. Scrap is usually the third-biggest contributor to waste.
It’s important to note that I’m not saying you should ignore scrap or that you shouldn’t care about it. You should. In most roll forming applications, it should be relatively easy to hold scrap percentage to 0.5% or less. If you’re close to that value on your production lines, then you’re doing pretty well.
Speed-loss is usually a bigger contributor to waste than scrap. And the most common form of waste is downtime. If you have a lot of excess capacity in your plants, then downtime waste might not be an important concern for your company. If you’ve captured a lot of the market and your customers are saturated so that your Sales function cannot sell the capacity you already have, then you’re doing very well and this blog post might not be for you. If your company isn’t sitting pretty at the top of the heap, or if you’re struggling to find capacity without buying new equipment then you should continue reading.