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All companies have some type of rejected parts, defective parts, returned problem parts or those that did not sell have not been scrapped. Do not throw these away for they provide wonderful examples of what is wrong with your firm.
Look at examples of how not to do something. These parts represent failures and what not to do in your industry or represent that product which the market is not yet anticipating, and/or willing to buy. What should be done with this bad material, rejects or product returns? These products do not have a sales value but they do act as excellent examples of what your employees need to learn not to do. This includes inventory that does not move, products that were not popular or did not move for various reasons, overstock items that someone thought would sell or other gluts of inventory parts that were made in excess and sit for years on the shelf. Here are a few thoughts for the inevitable accumulation of inventory problems that all companies face.
Consider these options for rejects, returns, off-spec material:
- Fixable? Can the items be readily fixed? If they can be fixed outside of the normal production area, call in those on layoff and put them to work, call in temps to repair, call Goodwill and hire their organization for simple work. They put people in jobs who have problems getting work and will be very reasonable with their pricing.
- Rework? Are these parts or rejects able to be used as parts (with a little work)? If so rework them and get them back into inventory as quickly as possible.
- Alternatives? Can you think of a possible use for them? If they are beyond repair and require more cost to repair than to scrap, let them go and do not hesitate. Assign someone in purchasing to find a potential buyer for these parts before turning them to the scrap dealer. There may be a firm that will pay to take rejects off your hands at a rate higher than that paid by the scrap man. Once you have tried a few interested parties that ultimately were not interested, call the scrap man and do not think about it twice.
- Prior historical uses? Have you seen anyone put these items to some use in the past? If you have seen other uses for them, did they seem to be a good or useful ideas?
- Analyze and categorize reasons: Rejected products should be analyzed and categorized by problem type, and followed to discover the frequency of each type of problem (i.e. Machinery problems or errors, operator error requiring training, specific shift manufactured, problem material from a specific vendor with quality problems).
- Teaching aids? Keep examples of all rejected products for illustrating and demonstrating to new recruits and trainees how not to make your product. Visual examples are very effective. Keep them in view for comparison to problems and use these examples for testing your employees. Hang them on the wall and describe in writing or clear labels what is wrong with the product.
- Market worth? Request your purchasing department to inquire as to the market worth of the rejected parts. They may have a donation value (tax credit) if given away to selected charities that have a use for them. Compare the tax credit to the scrap value if there are two numbers available.
