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articles:coordinating_purchasing_and_accounting [2019/10/06 12:28] – rrandallarticles:coordinating_purchasing_and_accounting [2019/10/06 12:35] – rrandall
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 ====== Reducing Waste: Through Coordinating Purchasing & Accounting ====== ====== Reducing Waste: Through Coordinating Purchasing & Accounting ======
 {{ :articles:po_receiving.png?nolink&250|}} {{ :articles:po_receiving.png?nolink&250|}}
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-An incredible amount of waste is hidden in poorly coordinated activities between groups such as procurement, Receiving, and Accounting.+An incredible amount of waste is hidden in poorly coordinated activities between groups such as Procurement, Receiving, and Accounting.
  
 ===== Example 1 ===== ===== Example 1 =====
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 More recently, I visited a company where I interviewed their Receiving personnel. A common issue for them is where the Purchasing function orders a length of wire/cable (e.g., 1,000 feet), but the supplier "Packing List" reflects an excess (e.g., 1,003 feet). Even though the cost remained the same as the original amount of wire/cable ordered, the company's Accounting Dept. will not pay the supplier until the Purchasing function issues a revised "Purchase Order" for the actual amount received. While the cost associated with this administrative function far exceeds the cost of the excess wire/cable, it delights the Accounting function! More recently, I visited a company where I interviewed their Receiving personnel. A common issue for them is where the Purchasing function orders a length of wire/cable (e.g., 1,000 feet), but the supplier "Packing List" reflects an excess (e.g., 1,003 feet). Even though the cost remained the same as the original amount of wire/cable ordered, the company's Accounting Dept. will not pay the supplier until the Purchasing function issues a revised "Purchase Order" for the actual amount received. While the cost associated with this administrative function far exceeds the cost of the excess wire/cable, it delights the Accounting function!
 +
 +===== The Solution =====
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 +The solution is to ensure that intertwined activities, such as Procurement, Receiving, and Accounting, are coordinated in a formalized, structured manner. Establish communication channels to quickly identify and resolve issues (such as those mentioned above). And define responsibilities along with an escalation process to ensure that the same issues are prevented from recurring. 
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 +It's amazing how few companies take these simple steps!
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