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When doing small production runs (200 pcs) engraving on parts for customers. How do you handle scrap/errors. Do you tell the customer that for 200 pcs that a percentage may be scrap? I have engraved a fair number of parts for this customer but occasionally I make a error on a part. The part costs me about 8 times my piece charge to have the anodize stripped off and re-anodized to fix my error. What is the best practice to handle this?
Rich,
You state you have done a fair amount of these - Whats your percent error ??? Whats the cost to refinish the item ??
Add your percent error to the cost of the job and your all set. We normally add 15% to our materiel cost when cutting because you cant use every square inch and a few part will come out bad its going to happen, you just have to account for it.
Quick Example : Run of 100 - Cost per item $1
On a run of 100 you mess up 5 parts - 5% error
Each part cost $8 to refinish ($8x5 = $40)
Total job cost = 100 x $1 + 5 x $8 = $140
New Item cost to charge your customer = $1.40
The worst thing to do is not account for error and cut your margins back because of bad product.
If they dont want to pay the extra explain to them youll need 5% more product to complete the job.
I'd ask the customer to provided spares to meet the full 200 piece order in case of errors.
-John
When they provide the material, that's what I do. On one job, for example, it takes 36 sheets of material to cut their 2,000 parts, so I have them send me 40. Usually I have little or no waste so accumulate the extras in case of a major problem, since they order 2-3 times a year.Quote:
Originally Posted by John Kleiber