Reply to post: Maths Class

Margin mugs: A bank paid how much for a 2m Ethernet cable? WTF!

MachDiamond Silver badge

Maths Class

Back when I was in school the thing that we hated the most in maths was word problems. Looking back on them now, the thing they failed to teach was how to present numbers in a way to change perception. Some will scream about "it's so unfair" when a large oil company is said to be earning XXX billion in profits but fail to work that number out as a percentage of revenue. That percentage may be dead in the range of what a healthy company should be netting.

Little items are a drain on profit margins. The cost to have them on the shelf and the labor to handle them often leads to a net loss. As the seller, you are also the one that often has to eat the cost of returns if the item is defective or ordered incorrectly. While you may be allowed to return them to the wholesaler for credit, there's no point when there are just a couple. The cost of labor and packaging to send them back can be more than the credit. You might as well just bin them and be off doing something that is bringing in revenue.

There are certainly well documented examples of big rip offs that have no good excuse but some of the more famous ones aren't. Remember the fantastically expensive toilet seats for an aircraft? An extremely custom part often ordered and made one at a time to very tight requirements. The one you can buy at the DIY shop is mass produced in the thousands and doesn't have to be tested to meet flammability standards and come with extensive paperwork that tracks every aspect of its materials and manufacture. Paperwork that has to be preserved for a decade or more. How about the $400 hammers. Again, spec'd to .025mm tolerance, special part number marking that must be applied to a tight tolerance. Lot tracking to show the handle was sourced from a sustainable supplier and showing the head was forged from XX% recycled content. Each one individually packed in an anti-rust wrap, custom box, etc. Oh, and they want 81 of them packed a specific way on a pallet to be shipped by the most horrible trucking company to have ever been spawned. They couldn't have consolidated needs and placed an order that was at least a full day of production worth since it would take a few days to set up the line for extra inspection, logging and marking. The $375 premium was fully justified. Government contracts can be great for a company, but it would have been more efficient to place the order at a hardware store for off the shelf models if they weren't already in stock.

Companies are so scared of being ripped off by letting departments have a bit of petty cash for mundane purchases or allow somebody like the IT department order some commonly used items, like a 2m ethernet cable, by the case to have on hand. Maybe that case lasts a couple of years, but the bottom line cost would be less in the first year and they would also be to hand. I've recently been into Malicious Compliance videos on YouTube. Those illustrate a lot of the control freak silliness. I've always thought that a good business hires the best people they can and gets on with it. Any bad apples get turfed out as quickly as possible. If it makes more sense to run to the local shop to get something so they aren't being held up, that's likely better than having purchasing spend an hour trying to find the best price from an "approved" vendor and then waiting several days to have it delivered. I think we've all seen that sort of monkey think.

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