WASTE
Management
JACQUES S. OSMEÑA
Bachelor of Science in Industrial Engineering
COTE – Industrial Engineering Department
Introduction and meaning
The industrial waste and scrap consists of spoiled raw-materials,
rejected components, defective parts, waste from production
departments etc. involves some commercial values. They should be
disposed of periodically and proper credit of the amount should be taken
in the books of accounts. Hence, waste management places an important
role in managing operations. Wastes can be categorized into obsolete,
surplus and scrap items.
Obsolete items
These are those materials
and equipment which are
not damaged and which
have economic worth but
which are no longer useful
for the Company‟s
operation owing to many
reason such as, changes in
product line, process,
materials, and so on.
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Scrap
It is defined as process wastage,
such as, turnings, borings,
sprues and flashes. They may
have an end-use within the plant
having commercial values.
Hence, should be disposed of
periodically.
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Surplus items
These are those materials and
equipment which have no
immediate use but have
accumulated due to faulty
planning, forecasting and
purchasing. However, they have
a usage value in future.
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Reasons for generation and accumulation of
obsolete, surplus and scrap items
1. Changes in product design: This may lead to some
items getting invalid so far as the final product is
concerned. Hence, the entire stock of such items as
surplus obsolete.
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Reasons for generation and accumulation of
obsolete, surplus and scrap items
2. Rationalization: Sometimes raw materials are
renationalized so as to minimize variety and simplify
procurement. The rationalization process renders some
items as surplus or obsolete.
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Reasons for generation and accumulation of
obsolete, surplus and scrap items
3. Cannibalization: When a machine breakdown occurs,
sometimes it is rectified using parts of an identical
machine which is not functioning due to various
reasons. This process of „cannibalization‟ is not
uncommon in many project-based industries. When
continued unchecked, this results in obsolete and scrap
items. 8
Reasons for generation and accumulation of
obsolete, surplus and scrap items
4. Faulty planning and forecasting: The marketing
department may have projected a sales forecast which
might be on the higher side. Any material planning has
to be based on sales forecasts and this could result in
surplus items. Wrong indenting by the user
departments also leads to accumulation.
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Reasons for generation and accumulation of
obsolete, surplus and scrap items
5. Faulty purchase practices: Sub-optimizing decisions
like buying in bulk to take care of discounts and
transportation economy without taking into account
factors such as, shelf life, storage space requirements
and technological changes once again lead to the
accumulation of surplus and obsolete stocks.
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Reasons for generation and accumulation of
obsolete, surplus and scrap items
6. Other causes: Many items are held as insurable
spares for many years without any consumption. Faulty
store-keeping methods, without adequate
preservation, lead to spoilage. Inferior materials
handling, improper codification and poor manufacturing
methods also result in obsolete, surplus and scrap
items. Poor maintenance of machine tools may result in
excessive tools wear and greater process scrap. 11
Identification and control
The combing process of combining the stock records and
movement analysis has been found very effective in locating such stocks
in the total inventory. Stock issue cards should be combed and items
which have not been consumed (non-moving) for a period of one year
must be isolated. A list of such items and their value in terms of money
and time must be made.
Identification and control
Similarly, such lists must be prepared for items which have not
moved for 2 years, 3 years, 5 years and above. Such lists can then be put
up to top management for disposal action. Care must be taken to prepare
a separate list of imported spares and insurance items. Such combing
and movement analysis must be done on a continuous basis.
Movement analysis statement
This could even guide the management as to when the
changes could be made so that the existing stock can
be consumed in full.
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Effective point advice
Many organizations have introduced formal documentation in
introducing changes in design or product. the proposed changes, details
of new materials and products required, details of materials and the
products which will be invalid/obsolete when the change occurs and the
approximate date when the change is expected to be introduced are
detailed and circulated to concerned departments. EPA thereby helps in
tapering off the stocks of „invalid‟ items, cancellation of orders for such
items, placing orders for buying and/or manufacturing new items and
related activities. EPA systems help in better coordination for profitable
introduction of changes with minimum „side effects‟ such as the
accumulation of obsolete items. 15
Full-fledge scrap salvaging department
It is also advantageous to the end-users in each category and
supply of scrap at the appropriate time for production. Often informing the
production department at the right time about the volume of scrap
generated enables prevention of excessive scrap through timely changes
in production methods, tooling and materials.
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Some methods of disposal
Disposal Route # 1. Feedback:
Circulation within the company to its various units at various locations
and to different departments to get necessary feedback of the requirement
of surplus or obsolete stock of one unit to another unit.
Some methods of disposal
Disposal Route # 2. Return to the Supplier:
If there is no requirement from within the company units/departments,
then materials should be returned to its original supplier at original cost after
deducting a small amount as a restocking charge.
Good suppliers do take back such unused materials in order to develop
better business relationship. Nowadays, the industrial buyers insist on
incorporating buy-back clause during finalization of purchase contract.
Some methods of disposal
Disposal Route # 3. Direct Sale to Another Company:
Surplus and obsolete materials of one company may serve-a useful
purpose in another company having the same product line and an identical
production system. In such cases, attempts should be made to sell surplus
and obsolete materials to those firms. Sometimes scrap of some company
becomes the raw materials of another.
These categories of scrap cover steel scrap, machine shop turnings,
plate scrap, punching scrap, copper bearings scrap, brass scrap, old scrap
zinc, tin scrap, scrap lead, nickel chrome, stainless steel, old packing
materials, used paper, and so on.
Some methods of disposal
Disposal Route # 4. Sale to Dealer or Broker:
Sale to a dealer or broker may be done by auction, with notification on
„as is where is‟ basis. It may be open auction or tender. Yearly rate contract
system can also be followed where the dealers are to collect the scrap from
the particular area of production shop. The contract procedure and legal
formalities adopted in buying are applicable in sales of surplus, obsolete
materials, scrap and waste.
Some methods of disposal
Disposal Route # 5. Sale to Employees:
Some organizations follow the practice of selling the surplus,
obsolete and non-moving items to their employees at a very low
price. This sometimes satisfies the employees who make some gain
by re-selling the materials or by using the same in their houses.
Some methods of disposal
Disposal Route # 6. Donation to Educational/Research Institutions:
Various schools, colleges, polytechnics, engineering and technology
institutes, universities, research centers, medical colleges and scientific
laboratories require various tools and equipment for research. This is why
many organizations follow the practice of disposing off unwanted materials
to the academic institutions as a good gesture and also to enjoy some tax
benefit.
In fine, disposal of surplus, scrap and redundant materials is to be made
in a planned way to get maximum revenue or derive other benefits to the
organization. Efficient managers are those who can covert “waster into
wealth”.
“ Skill Development #8
Use the production or service facilities you used in the
past activity and get the information for the following
questions:
1. Scraps, Surplus, and Obsolete items in the
Company.
2. Method of Disposal of wastes, scrap and obsolete
items.
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Thanks!
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