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How Long To Keep Non-Conforming Material?

Discussion in 'Manufacturing and Related Processes' started by Nikki, Aug 20, 2015.

  1. Nikki

    Nikki Well-Known Member

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    Hello All -

    We are a plastics compounder and from time to time, we have rejected material. The reason for the rejection could be that it is not the right color, the physical properties don't match our customer's spec, its contaminated, etc.

    My question, is how would you determine how to keep this material?

    Normally, we hold onto it, and if it can be corrected, we try to correct it in the next order. But sometimes customers don't order the material for 4 or 5 years! This means I am spending a lot of time tracking material that is just sitting there for almost half a decade.

    Selling to scrap dealers is not really an option. I've tried contacting several companies, and they have stated that if its less than a truck load of material, they are not interested.

    The lot sizes range from 20# to 300#. Majority of the rejections are 50#.

    Thoughts?

    Thank you in advance.
     
  2. Jennifer Kirley

    Jennifer Kirley Moderator Staff Member

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    The push to minimize inventory with a "Just In Time" system is based on the same cost management principle as you described, only the material (raw material, components etc.) status is different. The benefit of keeping the material is weighed against the cost to replace it and the cost to dispose of it - an interface with Environmental Management. Costs include the "opportunity costs" of space that could be used for productive activities, personnel time and, to a lesser extent the system bandwidth and memory used if the maintenance is automated.

    You could base part of your decision on how soon you think the material might be needed. I agree that for plastic pellets the justifiable time to maintain the material would be short. I have clients who found buyers for their scrap material to make things like shopping carts, but it's true they want larger quantities. I wonder if there is a university engineering department who could use the material for their plastic injection molding or other engineering programs? You might contact USM or Orono.
     
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  3. Candi1024

    Candi1024 Well-Known Member

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    I suppose I would base the decision on a combination of factors. Cost to you (materials and labor time), floor space, time between customer orders, and lot size.

    As far as scraping, would you be able to get a dumpster and collect unwanted material until it is enough for the scrap companies?
     
  4. hogheavenfarm

    hogheavenfarm Well-Known Member

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    We would feed it to the grinder and then run a 'regrind' item to use it, or sometimes capstock it, depending if it was just a color/brittleness issue. Otherwise, as you said, we would have gaylords of regrind material sitting on pallets taking up space. Eventually, we would pay to a processor to pick it up and take it away to be used as pipe or fence base. This was certainly not an ideal solution as we not only paid to store it, but paid to dispose of it as well, but there wasn't any other way to get rid of it. For smaller amounts as you have, do not overlook the 'green recycle' companies building things from reprocessed plastics. They typically do not need as much, and while you may not be able to actually sell it, they may pick it up for free. Finding these is not easy since they tend to be small operations. Here is an quick example of what I mean - http://www.dgrade.com/
     
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  5. Nikki

    Nikki Well-Known Member

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    I had tried to contact colleges around here. I was thanked for the information - and was told that they would pass it on to the instructors in those plastics departments - but never heard anything more :(
     
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  6. Claes Gefvenberg

    Claes Gefvenberg Moderator Staff Member

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    So your basic problem is more like how to get rid of it, than for how long you want to keep it?
     
  7. hogheavenfarm

    hogheavenfarm Well-Known Member

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    Actually Claes, there could be a retention period required, we operated under the AAMA program, http://www.aamanet.org/general/1/32/certification , which did have required inspection, retention, and test products records, and were audited twice a year by this CB. I cannot remember the retention time, I think it was three years though. Colors had to be 'exposed' to UV for certain times, and plastic baked in a dry air oven and inspected for inclusions, delamination, etc. Impact tests and other tests had to have records and samples retained as well.
     
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  8. Nikki

    Nikki Well-Known Member

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    A bit of both. I want to figure out if there is a formula I can come up with to determine the amount of time to keep the material. Sales is always pushing me to hold onto stuff by saying, "Oh I should get a PO any day for this stuff, please don't get rid of it yet". And then it never happens. If I can come up with a solid formula to determine the time frame to hold the material, than I can use that regardless of their begging...

    When it comes time to get rid of the material, since most are small lots, we just toss it in a compactor - but sometime with the larger lots, that is difficult to do.
     
  9. hogheavenfarm

    hogheavenfarm Well-Known Member

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    Do you have a "expiration date" or warranty period for your product? If so, then raw materials/product should not be stored beyond that, and probably well short of that, keeping in mind you are technically lengthening this by storing the product for a length of time and then selling it. If I buy a brand new car with a ten year -100,000 mile warranty, and park it in my garage for 9 years, there no longer is an 'additional' 10 years on the warranty, only 1 year. Products unsold in inventory are 'running the meter' on UV breakdown, hydroscopic absorption, and damage, to say the least.
     
  10. Nikki

    Nikki Well-Known Member

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    We do apply a shelf-life to our materials of 2 years. Although we do offer recertification of the product once it passes the shelf-life as long as the material has sat unopened.
     
  11. Jennifer Kirley

    Jennifer Kirley Moderator Staff Member

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    If you can determine the material cost to make, the value of your time and how much time is spent on maintaining it, I could come up with a model in Excel. Ideally the equation would also factor in the value of the space to store it. If you can get a building overhead figure from your accountant and the square footage of the building, the square footage of the stored material can be factored. But those are less value for decisions unless you are pressed for space.

    You can probably use my Quality Cost Calculator to do the math for the simple stuff: your time, material value. Use the count of events cell to show costs over time. Manually enter figures in Worksheet 2 to show trends. You can use the material's cost/sales value/profit in the $sales category to see when the scale tips the wrong way, so to speak.
     

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  12. Jennifer Kirley

    Jennifer Kirley Moderator Staff Member

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    Maybe the material should be stored in their offices, to either motivate them or drive home the point of why we don't keep the stuff around for years. :D
     
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  13. Norml1

    Norml1 Member

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    Another option to think about for disposition of this material is the risk of flow-out. I have seen instances where material was rejected, tagged, and later used in production.
     
  14. Andy Nichols

    Andy Nichols Moderator Staff Member

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    If it's caused through faulty processing, you should be considering the cost of storage, handling, repacking etc as a cost of quality. It's simply not enough to consider the replacement costs and, frankly, I'd be asking some serious questions if I were a stakeholder, why money was being spent on storing stuff that wasn't actually "sold" or didn't have a customer order against it. Sales need to stop lying and whomever owns the budget for storage should be encouraged to get rid of the materials and the store.

    Is Sales worried that your lead times are not competitive? So they want you to hold on to product?
     
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  15. Claes Gefvenberg

    Claes Gefvenberg Moderator Staff Member

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    I am a bit intrigued. We are talking about REJECTED products here, and sales want you to keep it in case of getting an order, right? Then if possible, it is corrected if and when that order surfaces. I am with Andy: If lead times is what the sales people worry about, I get the feeling that they would probably be considerably better if you got rid of the rejected stuff and started from scratch for each new order. Do they really want to add the time needed to deal with previous scrap to the lead time?
     
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  16. Eric Twiname

    Eric Twiname Well-Known Member

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    Funny...I do that very thing with some "off-cuts". It is very effective.

    Sales ends up using the parts as trade-show demos or comes back asking how to scrap it.
     
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  17. MikeH

    MikeH Member

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    If it's a real issue, I would have thought QA should be directing Sales on what's happening with the nonconforming stock. I'd be interested to hear how you went on with this since it was first posted Aug 2015. Did you make progress?
     
  18. Eric Twiname

    Eric Twiname Well-Known Member

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    Can I be a fly on the wall for that meeting? I'll bring popcorn...:rolleyes:
     
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  19. MikeH

    MikeH Member

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    "..on what's happening with the nonconforming stock.." <--- adding in context ;)
     
  20. Eric Twiname

    Eric Twiname Well-Known Member

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    Didn't mean to take it our of context, Mike...I just think it would be entertaining to watch QA direct Sales on any topic at all.
    Sales and QA....that's like saying "Round" and "Outgoing"...there just isn't much common ground to stand on...
     
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