Small physicals are highly accurate and can be done regularly throughout the year, sometimes eliminating the need for an annual physical. Accurate bills of material are essential. Many companies have sloppy bills of material, or have one bill of material in engineering and another one in manufacturing. An effective planning system requires one, common bill of material for each manufactured item and it must be completely accurate. If the bill of material is inaccurate, inventory will be relieved inaccurately.
Some items have an inherent scrap factor that varies slightly with each production run.
This is common with sheet metal and plastics. You should define the quantity required in the bill of material as accurately as you can, but schedule periodic cycle counts of these materials to adjust for scrap variance. Finally, you must train everyone in the company to adhere to procedures. Parts cannot be pulled from stock without recording the transaction on pick lists or material tickets. Bills of material must be faithfully updated for engineering changes.