How to Model Scrap and MOQs Accurately in Cetec ERP Quotes

A cable or wire harness quote can look profitable until production starts consuming terminals, seals, wire, and other material that never appeared in the original cost estimate.

Some material is lost through normal production. Other material is consumed for destructive testing or setup. Purchasing may also have to buy 500 pieces when the assembly only requires 200 because the supplier has a minimum order quantity (MOQ).

For estimators and controllers, those costs need to be visible before the quote goes to the customer. Cetec ERP provides several ways to account for planned scrap and excess material directly in the BOM and quote costing process.

The Impact of Scrap and MOQs on Margin

Consider a quote for 100 cable assemblies. Each harness requires two terminals, so the BOM calls for 200 terminals.

Production also needs four terminals for destructive pull testing. The supplier, meanwhile, will only sell the terminal in quantities of 500.

The material requirement now has three separate pieces:

• 200 terminals required by the finished assemblies
• 4 terminals planned for testing
• 296 additional terminals that must be purchased to meet the supplier's MOQ

If the quote only prices the original 200 terminals, the resulting margin is based on a material cost the company cannot achieve.

Cetec ERP separates these issues so estimators can account for the expected material consumption and purchasing constraint before setting the final price.

Setting Scrap Factors on BOM Components

Cetec ERP supports both a scrap factor and a scrap adder on BOM components. The distinction matters because they behave differently when order quantities change.

A scrap factor adds material to the quantity required for each top-level assembly. Because that amount is multiplied by the order quantity, it is useful when expected waste increases as production volume increases.

A scrap adder is a fixed additional quantity added after Cetec ERP calculates the extended component requirement.

That makes the scrap adder useful for requirements such as destructive test pieces or setup material that remain relatively fixed for the order.

For example, if the 100-harness order requires four additional terminals for testing, those four pieces can be modeled as a scrap adder on the terminal component. If the quote later changes to 200 harnesses, the system still treats those four pieces as a fixed additional requirement rather than doubling them automatically.

Cetec ERP recommends maintaining planned scrap calculations on the permanent BOM revision when the additional consumption is known in advance. See Cetec ERP’s Scrap Factor vs. Scrap Adder guide for the underlying calculations.

When to use each method

Use the behavior of the material requirement as the deciding factor. If expected consumption grows with every assembly produced, a scrap factor may be appropriate. If the requirement is a fixed number of setup, testing, or sacrificial pieces for the production order, a scrap adder is usually easier to model accurately.

The important point is to apply the value to the relevant BOM component rather than adding a general percentage to the entire quote. That keeps the additional requirement connected to the part number that creates the cost.

Accounting for MOQs in Cost Calculations

Scrap determines how much material production expects to consume. An MOQ determines how much Purchasing has to buy.

Cetec ERP’s quote-level vendor costing tools allow users to maintain a vendor's minimum order quantity along with cost/quantity breaks. The BOM worksheet also tracks excess material costs associated with the assembly.

Return to the terminal example. After including the four test pieces, the planned requirement is 204 terminals. If the vendor requires a minimum purchase of 500, Purchasing still has to buy another 296 pieces.

At $0.15 per terminal, that is $44.40 of additional material purchased because of the MOQ.

Whether that cost should be recovered entirely on the current order depends on the business. The remaining terminals may have a predictable use on another customer order, or they may be a customer-specific component that could sit on the shelf indefinitely.

Cetec ERP’s BOM worksheet provides an Excess Material Total where excess-material cost can be reviewed. The cost can be ignored, rolled into the BOM, or added as a separate quote line depending on how the company wants to handle the charge.

The full process is documented in Cetec ERP’s Quote to Order Guide.

Reviewing the Cost Breakdown Before Sending the Quote

Before releasing the quote, the estimator should be able to explain where its material cost comes from.

Cetec ERP tracks estimated BOM cost by material, labor, overhead, and miscellaneous charges. Within the quote BOM worksheet, estimators can review component quantities and costs alongside labor, tooling, excess material, and other quote-specific costs.

For a harness with planned test pieces and an MOQ-constrained terminal, check that the component quantity reflects the expected scrap or test requirement, the vendor MOQ is current, the excess-material treatment matches the company's pricing policy, and the final BOM cost transferred back to the quote includes the intended charges.

That review gives Sales and Accounting a cost basis they can trace back to specific material assumptions rather than a blanket contingency percentage.

Cetec ERP’s Job Cost and Manufacturing Cost Accounting documentation provides additional detail on how estimated material, labor, overhead, and miscellaneous costs are calculated.

Common Pitfalls and How to Avoid Them

Using a scrap factor for fixed test quantities. If every production order consumes four destructive-test pieces regardless of whether the order is for 100 or 1,000 assemblies, multiplying that requirement by the production quantity can overstate cost. A fixed scrap adder is a better fit for that situation.

Applying one scrap percentage to every component. Wire, terminals, seals, labels, and molded components can have very different loss patterns. Model planned scrap against the component creating the requirement.

Ignoring the MOQ because excess material remains in inventory. Inventory left on the shelf still required cash to purchase. For customer-specific or slow-moving components, review how much of that cost should be recovered by the current quote.

Failing to update vendor pricing. Cetec ERP supports vendor cost/quantity breaks and minimum-order information in its vendor costing worksheet. Reviewing those values before transferring costs back to the BOM reduces the chance that an old purchasing assumption becomes the basis for a new quote.

Example: Quoting a Test-Heavy Cable Assembly

Suppose a customer requests 100 harnesses.

The terminal requirement is two per harness, or 200 pieces. Quality requires four additional terminals for destructive testing. The estimator assigns those four pieces as a scrap adder on the terminal BOM component, bringing the planned requirement to 204.

Purchasing then confirms that the supplier's MOQ is 500 terminals. The remaining 296 pieces create an excess-material requirement.

The estimator reviews that cost in the BOM worksheet and determines how the excess should be handled in the customer price. Once the material, testing allowance, MOQ exposure, labor, and other charges have been reviewed, the updated BOM cost can be transferred to the quote. Cetec ERP’s quote worksheet is specifically structured to carry component, labor, tooling, excess-material, and additional markup changes back to the quote.

For estimators, the result is a quote based on the material the company expects to consume and purchase. For controllers, the assumptions behind the quoted margin are visible before the order reaches production.

Key Takeaways

Model recurring per-assembly waste with a scrap factor and fixed extra pieces with a scrap adder. Keep scrap tied to the component creating the requirement. Record vendor MOQs and review the resulting excess-material cost before finalizing pricing. Then verify the complete BOM cost breakdown before transferring the estimate to the customer quote.

For more detail on Cetec ERP’s quoting tools, see Manufacturing Quoting & Job Costing. Cetec ERP supports BOM-based estimates for material, labor, overhead, cost breaks, and related manufacturing costs within the quoting process.