How Do I Track Raw Material Consumption in Fabrication?

You track raw material consumption in fabrication by connecting material planning, store issue, production use, offcut recording, scrap capture, and job-wise costing. The goal is to know what material was planned, what was issued, what was actually consumed, what came back, what became scrap, and what cost should be assigned to the job.

For fabrication companies, raw material consumption is one of the biggest margin drivers. A job may look profitable during quotation, but if material issue is uncontrolled, offcuts are not recorded, scrap is high, or rework consumes extra material, the real margin changes quickly.

Manual tracking can work for a small shop with few jobs. But when multiple jobs run at the same time, material moves fast. Plates are cut. Pipes are issued. Sections are consumed. Bought-out parts are added. Scrap is generated. Offcuts lie in the corner. If ERP is not capturing this movement, costing becomes guesswork.

AICAN Optiwise helps manufacturers connect material movement with job cards, production stages, and costing so raw material consumption becomes visible and controllable.

Start With Planned Material

Consumption tracking begins before material is issued. Each job should have a planned material requirement. This may come from a BOM, drawing estimate, cutting plan, or quotation assumption.

The planned material should define:

• Material type
• Grade or specification
• Size and thickness
• Quantity or weight required
• Expected wastage or scrap allowance
• Bought-out items
• Consumables where relevant

Without planned material, there is no baseline for comparison. The factory may know what was issued, but not whether it was reasonable.

Issue Material Against A Job

Raw material should be issued against a job card or production order. This creates accountability and connects consumption to costing.

If material is issued generally to the floor, it becomes difficult to know which job consumed what. That leads to inaccurate job cost and weak inventory control.

ERP should record:

• Job number
• Material issued
• Quantity or weight
• Heat number or batch where applicable
• Store location
• Issue date
• Issued by and received by
• Stage or operation if needed

This does not need to become complicated, but it must be consistent.

Capture Actual Consumption

Issued material and consumed material are not always the same. A plate may be issued for a job, partially used, and the balance returned as offcut. Pipes may be cut with some usable pieces remaining. Material may be issued but later replaced due to drawing change.

Actual consumption should reflect the material that truly went into the job plus unavoidable process loss. ERP should allow the team to record consumption, return, offcut, and scrap separately.

This distinction is important. If every issued material is treated as fully consumed, job cost becomes inflated and inventory becomes inaccurate.

Track Offcuts Properly

Offcuts are a hidden asset in fabrication. If recorded properly, they can be reused. If ignored, they become clutter, scrap, or lost value.

For each usable offcut, record:

• Material grade
• Size
• Approximate weight
• Heat number if required
• Source job
• Location
• Usability status

A good ERP should let planners search available offcuts before purchasing fresh material. This can reduce waste and improve material yield.

Record Scrap Separately

Scrap should not be mixed with offcuts. Offcuts are usable. Scrap is not usable for production in its current form, though it may have sale value.

Scrap should be recorded by job, material type, reason, quantity or weight, and disposal status. This helps management understand whether scrap is normal process loss or a sign of poor planning, wrong cutting, rework, or handling damage.

Scrap data is especially useful when comparing actual performance against quotation assumptions.

Compare Planned Vs Actual

The most important report in material consumption is planned versus actual.

For each job, the team should be able to see:

• Planned material
• Issued material
• Consumed material
• Returned material
• Offcut generated
• Scrap generated
• Excess consumption
• Cost impact

This helps the company identify where margins are leaking. If one part type repeatedly consumes more material than estimated, future quotes can be corrected. If one process creates too much scrap, engineering or cutting planning can improve.

Connect Material Consumption With Production Stages

In fabrication, material is consumed across stages such as cutting, fit-up, welding, machining, assembly, and rework. Tracking consumption by stage can help identify where waste occurs.

For example, excess material loss during cutting points to nesting, marking, or operator issues. Extra consumption during rework points to quality or fit-up problems. Additional bought-out parts may reveal BOM errors.

ERP gives stronger insight when material consumption is linked to production stages rather than recorded only at job closure.

Control Rework Consumption

Rework often consumes additional material, consumables, labour, and time. If rework material is not tracked separately, the company does not see the true cost of poor quality.

ERP should allow rework issue and rework consumption to be tagged. This helps management distinguish planned consumption from avoidable extra consumption.

The purpose is not blame. It is better process learning.

Where AICAN Optiwise Fits

AICAN Optiwise helps fabrication companies connect raw material planning, store issue, production consumption, offcuts, scrap, quality, and costing. This creates a more honest view of job profitability and material efficiency.

For owners, this visibility matters because material waste is not always visible in daily production. It shows up later as low margins, emergency purchases, and unexplained stock mismatch.

Founder’s Note

At AICAN, we see raw material consumption as one of the clearest measures of manufacturing discipline. If the factory knows what it planned, what it issued, what it consumed, and what it wasted, improvement becomes practical.

AICAN Optiwise is built to make that visibility available without forcing the shop floor into unrealistic data entry. Read more about our manufacturing work on About AICAN.

FAQs

What is raw material consumption tracking?

It is the process of recording planned material, issued material, actual consumption, returns, offcuts, scrap, and job-wise cost.

Why is issued material different from consumed material?

Issued material is what leaves the store. Consumed material is what is actually used in the job. The balance may return as offcut or unused material.

How do offcuts affect inventory?

Usable offcuts should remain in inventory. If not recorded, the company may buy new material unnecessarily.

Can ERP track scrap by job?

Yes. ERP can track scrap generated against a job, stage, material, and reason, helping improve costing and waste reduction.

How does consumption tracking improve quotation?

Actual consumption data helps compare estimated material against real usage, making future quotes more accurate.

How can AICAN Optiwise help?

AICAN Optiwise helps track planned versus actual material consumption, offcuts, scrap, rework, and job costing in one connected ERP flow.