Understanding Assembly Scrap, Component Scrap, and Operation Scrap in SAP PP-CO
In manufacturing, scrap is an inevitable part of the production process. Whether it's excess material, defective parts, or damaged products, scrap can have a significant impact on a company's bottom line. To manage scrap effectively, many manufacturing companies use SAP, an enterprise resource planning (ERP) software that integrates production planning and controlling functions.
Assembly Scrap, Component Scrap, and Operation Scrap are terms used in manufacturing processes to refer to the amount of raw material or product that is lost or discarded during the production process.
In SAP PP, there are three types of scrap that are commonly used: assembly scrap, component scrap, and operation scrap. Let's take a closer look at each type of scrap and their effects in SAP PP.
The different types of scrap have different effects:
In the material master record, assembly scrap (MRP view 1)
Component scrap in the Bill of Materials (BOM) or the Material Master Record (MRP view 4)
Operation scrap in the Bill of Materials (BOM) or routing
Scrap Categories and Their Effect in SAP PP
Example: Different Scrap Data and their Effects in SAP Let's say that a manufacturing company produces bicycles. During the production process, the company generates scrap in different ways:
Assembly Scrap: 5% of the raw materials used in the assembly process is discarded due to defects or excess material.
Component Scrap: 2% of the components used to manufacture the bicycles is lost or damaged during the manufacturing process.
Operation Scrap: During the painting operation, 3% of the bicycles are damaged or not usable due to defects or handling errors.
The company can record this scrap data in SAP and use it for analysis to identify areas where waste can be reduced and manufacturing processes can be improved. For example, if the company finds that a large amount of material is being lost during the painting operation, they may investigate the cause and implement changes to reduce the amount of scrap generated during that operation. By reducing scrap, the company can improve its profitability, reduce costs, and increase customer satisfaction.
Overview of the settings and process flow for Assembly Scrap, Component Scrap, and Operation Scrap in SAP
- Assembly Scrap
Assembly scrap is the amount of raw material that is lost or discarded during the assembly process. This can include things like broken or damaged parts, excess material, or material that is not usable due to defects. Assembly scrap can have a significant impact on the cost of goods sold (COGS) and the gross profit margin. By tracking assembly scrap in SAP PP-CO, manufacturing companies can identify areas of waste and take steps to reduce scrap and improve profitability.
You use the assembly scrap function to plan for the scrap which occurs from the manufacturing of an assembly. By adjusting the number of the dependent requirements created during the MRP run, assembly scrap increases the order quantity of the assembly and, as a result, increases the order quantity for each component in the assembly's BOM.
Using the percentage of scrap, the system automatically increases the quantity to be manufactured. However, the system always calculates the assembly's availability using the estimated yield. Furthermore, the MRP or stock/requirement lists always display the projected assembly yield.
Only when the material is an assembly is scrap used. Poor quality or unfavorable working circumstances, such as heat, cold, or moisture, are causes of assembly scrap.
For example
You are producing 100 PC of Finished Product. In the material master of the finished Product, you have entered an assembly scrap of 10%. When you produce the finished Product, the system increases the required quantities and activities so that the required lot size of 100 units can be costed or produced.
Settings: You can enter assembly scrap in the (MRP 1) view of the material master. Here, enter the assembly scrap in the form of a percentage in the assembly scrap (%) field.
Maintain (10 %) as the assembly scrap in the (MRP 1) view in the material master.
BOM structure of header material Finished Product with three components (Material A, Material B, Material C)
Create Process order for Finished Product material with order qty as 1
The system increases the quantities of the components by 10%
Scrap In the operation in the routing
Operation scrap is the amount of material that is lost or discarded during a specific manufacturing operation. This can include things like excess material, material that is not usable due to defects, or material that is lost during handling or processing. Operation scrap can impact the production cycle time, the yield of the production process, and the cost of goods sold (COGS). By tracking operation scrap in SAP, manufacturing companies can identify which operations are generating the most waste and take steps to optimize the manufacturing process.
Scrap that is expected to be produced during a certain operation.
The activity quantity consumed is indicated by the operation scrap entered in the routing.
Settings:
- In the Item Overview, go to the General data
- You can enter operation scarp in percentages
Operation and Component Scraps in BOM
Component scrap is the amount of raw material that is lost or discarded during the manufacturing of individual components. This can include things like excess material, material that is not usable due to defects, or parts that are damaged or unusable. Component scrap can impact the production cycle time and the yield of the production process. By tracking component scrap in SAP PP, manufacturing companies can identify which components are generating the most waste and take steps to optimize the manufacturing process.
If the material is a component, scrap that is planned to be manufactured.
Component scrap can be entered in the material master's MRP4 view. In the form of a percentage. The system considers this material during the scrap calculation if it is then used as a component in the BOM.
When period-end closing occurs, the unplanned component scrap is displayed as input quantity variations in the product cost by order and product cost by period tables.
The system determines the assembly scrap first, followed by the component scrap. The calculated scrap quantities are added, and the necessary quantity is increased as a result.
Settings:
The following options exist for specifying the component scrap:
Maintained in the material master record (MRP view 4)
In the BOM item
You can enter component scrap as well as operation scarp in percentages. When you enter operation scrap in a percentage, you also select the Net ID checkbox.
Process Flow :
BOM structure of header material Finished Product with three components (Material A, Material B, Material C)
Maintain (5%) as the component scrap in the BOM item.
OR Maintain (5%) as the component scrap in the (MRP 4) view in the material master.
Create Production order for Finished Product material with order qty as 1
The system increases the quantities of the components by 5%
Example 1
For the component Raw Material B of Semi-finished Product X, component scrap of 10% has been entered in the material master. The system therefore costs 100 pieces of the finished product at 55 PC (50 + 10%) of Raw Material B, not at 50 PC. The component scrap is 5 PC.
10% of the finished product's component scrap for Raw Material A has been entered in the material master. The system costs 110 Kg of Raw Material A (100 Kg plus 10%) The component scrap is 10 kg.
Example 2
You have entered an assembly scrap of 10% for the finished product in the material master. For the components Raw Material A and Raw Material B, you have entered component scrap of 10%.
Example 3
You have entered an assembly scrap of 10% for both the finished product and Semifinished Product X in the material master. For the components Raw Material A and Raw Material B, you have entered component scrap of 10%.
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