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Due diligenceExpert answer · 1 min read

How do I check a machine shop’s inspection records and scrapped parts?

Ask for the inspection records and the scrap log together, and check that they tell the same story. A shop that measures parts, records what it rejects and finds the cause is usually in control of its work. Missing records or unexplained scrap are the things to chase.

Look at how parts are measured. Ask who inspects, what gauges and machines they use, and when those instruments were last checked. Request a sample of inspection sheets from recent jobs and compare them with the parts on the shelf. Records that look identical from job to job, or that stop whenever the inspector is away, deserve a closer look.

Then turn to scrap. Ask how scrapped parts are logged, who decides a part is scrap, and where the material goes. Look for patterns: the same customer, the same machine, the same operator, the same program. A small amount of scrap on a hard job is normal. Repeated scrap on a simple one points to a process problem.

Follow a few scrap items through to the books. Who paid for the material, and was the customer billed for a remake? Ask about returns and complaints from customers, and how each was resolved. Customers who have been difficult often leave a paper trail. Ask which customers require formal reports with their shipments, and whether those reports are kept. Finally, ask what the shop changed after its worst rejected job, since the answer shows how it learns from mistakes and whether the same fault could return under new ownership.

Key takeaways

  • Compare inspection sheets with the parts and the gauges used.
  • Look for scrap patterns by customer, machine, operator and program.
  • Ask how returns and complaints were handled and recorded.

Sources

This answer is checked against primary sources. Links were last confirmed on the dates shown.

  1. 01
    Business Development Bank of CanadaGovernment
    How to conduct due diligence when buying a business
    bdc.ca·Checked Oct 21, 2026
  2. 02
    Business Development Bank of CanadaGovernment
    What are the steps to buying a business?
    bdc.ca·Checked Oct 21, 2026

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