Reducing Waste: Through Coordinating Purchasing & Accounting

An incredible amount of waste is hidden in poorly coordinated activities such as procurement.

A few years ago I visited a major industrial distributor where packaging and shipping personnel demonstrated their process for “picking” and “packaging” orders. A customer had issued the distributor a Purchase Order specifying “5 boxes of 10 light bulbs”. Unfortunately, the light bulbs were pre-packaged in boxes of 12. The light bulbs were priced as a “box”, without regard for the actual number of light bulbs it contained. So the distributor fulfilled the order as “5 boxes of 12 light bulbs” only to have the order rejected for containing an “overage”.

After the distributor explained that the price was the same whether there were 10 or 12 light bulbs in a box, the customer insisted that the boxes must only contain 10 light bulbs. This was because the customer's purchasing system had previously been configured to reflect each box as containing 10 light bulbs.

So, in order to promote customer satisfaction, the distributor instructed their packaging personnel to remove two light bulbs from each box… and place them into a trash bin. Incredibly, this satisfied the customer!!