How should I handle or track scrap during production?

When dealing with scrap of components during job processing, the main idea in DBA is to issue what you use to the job.   You do want to issue from inventory material that is used in production, even if the material ended up as scrap.

There is no formal scrap reporting of components in DBA.  The best report to use would be the new 'Closed Job Material Usage' Data View. You can access this Data View by going to the menus Jobs > Data Views > Closed Job Material Usage.    Use this data view to get a listing of estimated versus actual material usage of components in closed jobs.

As far as parent item or completion scrap is concerned:

We have added new functionality in build 393 which doesn't necessarily correlate to how many outputs you scrapped, but it helps you to keep track of whether you are completing a sequence short or entering over-completions against a sequence. This helps you to keep track of whether you are entering more or less good completions (not scrap) than the job quantity.

Against the first sequence of a job, you can enter completions that are more than the original job quantity or less than the original job quantity.  Do keep in mind that you cannot enter an over-completion or overage that you didn't enter in the first sequence of the job.  

If you want to set up an item code for the scrap parent completions, and receipt them from the job, there is a way to do this using secondary outputs.

You can set up and use an item as a Secondary Output to receipt the bad parent items to stock.   You would first want to set up an item code to represent the "bad" parent items, then go into the Details of the job where you need to utilize the scrap parent item code.  From the Details tab of the job, select the "Output" radio button to go into the Outputs tab.  You would then add the secondary output item to the job in the Outputs tab.  For more information on secondary outputs, please refer to the Outputs video, which you can access using the link below.

Using a secondary output item to receipt the "scrap" parent items from the job allows you to receipt the parent items that are "scrap" from the job without using the primary output item.  This allows you to keep the bad parent items in stock, and you can issue them to a job later for re-work if desired.  

If you do not plan on re-working the scrap parent output items, then there wouldn't be a need to receipt them from the job using a secondary output.