What is Scrap and Rework?
Scrap is material or product discarded because it cannot be used, while rework is defective output repaired to bring it back to specification.
Definition
Scrap and rework are the two primary outcomes when production output fails to meet specification. Scrap is material or finished work that must be discarded or recycled because it cannot be salvaged, representing lost material, labor, and capacity. Rework is defective product that can be corrected through additional operations, recovering the unit but consuming extra time, materials, and cost. Both are quality and cost metrics that manufacturers track closely, since high scrap and rework signal process problems, erode margins, and distort capacity if not planned for. Capturing them accurately is essential for true product costing, yield analysis, and continuous improvement.
How Scrap and Rework Works in ERP
ERP systems let operators report scrap and rework quantities against production order operations, so the system adjusts completed quantities, charges the associated cost, and updates yield statistics. Planned scrap factors can be built into BOMs and routings so MRP inflates material and capacity requirements to cover expected losses. Rework can be handled through additional operations or separate rework orders that capture the extra labor and materials, and the captured data feeds quality reporting and cost variance analysis.
ERP Vendors with Strong Scrap and Rework
Global Shop Solutions
All-in-one ERP for small to midsize manufacturers
Epicor Kinetic
ERP built for manufacturers — from job shop to enterprise
Plex Manufacturing Cloud
Cloud-native ERP purpose-built for manufacturing with real-time shop floor control
Genius ERP
Purpose-built ERP for engineer-to-order and custom manufacturers
Frequently Asked Questions
What is the difference between scrap and rework?
Scrap is defective or excess material that cannot be salvaged and must be discarded or recycled, so its material and labor are lost. Rework is defective product that can be repaired through extra operations and returned to sellable condition, recovering the unit but at additional cost. Both reduce profitability, but scrap is a total loss while rework is a partial recovery at higher cost.
How does ERP account for planned scrap?
Manufacturers can assign a scrap or yield percentage to BOM components and routing operations to reflect expected losses. MRP then inflates the planned quantities so enough material and capacity are scheduled to deliver the required good output. Comparing this planned scrap against actual reported scrap reveals whether processes are performing to expectation.