Posted by Samsaranda on 11/06/2019 12:33:54:
Throwing away items of value reminded me of an engineering company that I worked at and the power of accountants. The company was established in about 1910 and produced many variants of its main product through the years but because of upgrades and redesigns there were requirements to supply customers with a multitude of different spare parts. The product was rotary lobe pumps and when a customer had a breakdown he needed his spares pdq. To cater for this service to the customer we made and held a number of spares for each variant of the product, the lead time for some items to be manufactured could be six to eight weeks so keeping finished items ready for dispatch was how we serviced the customer. We were taken over by a large engineering group and their accounting policy could not get its head round how we serviced the customers requirements for spares, their directive was that we had to move to just in time supply and that we had to drastically reduce the value of materials and components held on our balance sheet. The end result was that racks full of completed spares in our stock area were transferred to skips and dumped and the service we gave our customers who required spares for obsolete products went through the floor. The company was then taken over again a few years later and very quickly ceased to exist. I am afraid that I regard accountants as the enemy of engineers.
Dave W
That's the argument for keeping a stock of spares; it keeps customers happy!
But the dreaded accountant takes a different view: he asks 'what's the value of doing this'. To answer that question he compares the cost of doing stuff against the cash it brings in. Accountants care little about customers, engineers, salesmen, or public relations. They only look at the numbers.
In my experience accountants don't make business decisions. Instead they use a spreadsheet to show the boss which parts of his business are profitable and which are losing money. It's the boss who actually makes nasty decisions, and its very convenient for him to blame the accountant. It is traditional to shoot the messenger.
On the shop floor and in the warehouse the lights may be burning bright, everybody convinced they're doing a good job. The balance sheet might tell a different story; maybe the business has been borrowing money to keep going for years. Maybe the company has to cut costs because they are suddenly competing for sales with someone who is more efficient.
Friend of mine got a high-paid job as management accountant to a moderately well-known furniture maker. Started with a quick tour of a bustling cheerful business with lots of new cars parked outside. In the canteen he got the first whiff of trouble when he overheard a chap moaning about not being allowed to replace some cheap kit. After lunch he looked at the books and within half an hour found the company was bankrupt, totally on the rocks, with no way out. He was in the job because his predecessor had jumped ship rather than manage the collapse. The brand-name still exists. Local rumour has it the firm was bought by a rival for £1.
Lesson learned, it's all about money.
Dave
Edited By SillyOldDuffer on 11/06/2019 13:25:30