Posted by Mike Poole on 20/11/2020 14:27:22:
… The stores department policy of deleting and scrapping items that sit around too long meant they wanted to throw it out, it eventually was withdrawn from the stores and lived in various maintenance areas until the line was moved to another plant. It makes no sense to me to dispose of a vital component you might need with no chance of sourcing a replacement in a short time and you have paid for it but I am not an accountant.
Mike
Having had the dubious pleasure of managing a budget, I have some sympathy with Accountants, god forgive me!
Problem is storage is far from free. Purchase cost is just the tip of the iceberg. Outgoings like rates, heat, light, fire precautions, security, wages, and building maintenance tick away in the background eating money for years on end. Unless the thingy is used, it's money down the drain.
Very common for the workforce to keep stuff for a rainy day without realising money is being wasted on a grand scale. And when years later the thing is finally wanted, it's rusted solid.
Another way is to balance the probability of a bad loss against the cost of owning spares. Turns out ruthless stock management is usually cheaper than holding stock. (Not always!)
Just In Time provisioning can and does go spectacularly wrong but on average it's cheaper for a business to take the hit rather than tie money up in stock. I had contingency money for 'no spares' type disasters: unlike holding physical stock, the dosh took up no space whilst earning interest at the bank! It's also possible to insure against losses or to offset them against tax.
In an ideal world Accountants would understand engineering and engineers would understand accountancy. Otherwise one is playing the game knowing only half the rules! But it's too difficult, which is why accountants hold engineers in deep contempt and vice-versa!
At work I was all for brutal economies. Now I'm retired my home is full of treasures, ie junk! Don't care – it might be useful one day.
Dave
Edited By SillyOldDuffer on 20/11/2020 16:18:17