When does it pay to destroy good stock?

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Forums › Finance and wealth management › When does it pay to destroy good stock?

MrWestie

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#79446 17-Mar-2011 17:51

I know resturants and supermarkets do it.
Throw out perfectly good product rather than donating it etc.

I was at Ingram Micro yesterday and saw someone 'adjusting' stock with a hammer.
He was wortking his way through a pallet of Belkin Routers?
I didn't get close enough to see exactly what but it had a power supply.
My guess was about 150-200 units.

I know somehow on paper it cost less to destroy than giveaway/sell at cost, but oh the humanity.

Can some accountants tell how this is good business :)

nate

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#449373 17-Mar-2011 21:23

MrWestie: I know somehow on paper it cost less to destroy than giveaway/sell at cost, but oh the humanity.

Assuming the product is coming from an asian country, the shipping there, repair bill then shipping back (plus uncertainty around how long the refurbished product will last) and if you are manufacturing them en masse for very little $, its probably easier to destroy than to repair.

We had a supplier that if a product came back to us faulty, if we provided them with a certified destruction certificate, they would send us a replacement unit for no fee - it was just quicker/cheaper/easier for both parties.

South45

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#452404 27-Mar-2011 14:29

If stuff is from China the best thing for it is a hammer!

dontpanic42

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#452407 27-Mar-2011 14:43

I have seen this practice many times. It is extremely hard to swallow.

In one case, a certain company had branded clothing. That certain company got taken over by another company and as such, was re-branded.
The old branded clothing therefore became useless, and had to be destroyed.
There was absolutely nothing wrong with the clothing. In fact it was incredibly high quality stuff, but apparently they couldn't sell it for cost, or give it away.

I don't see why they couldn't have given the clothing away to people in need. It would've made the company seem caring, and someone would have gotten some useful clothing.
It is an absolute travesty.

Hooray for Capitalism aye?

richms

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#452424 27-Mar-2011 15:22

If there was some design issue with the board, or the manufacturers had swapped out to lower quality parts (common in asia) then it is not worth re-manufacturing them. NZ's labour costs are far too high to do that sort of stuff here.

It wouldn't be worth the brand damage to sell them thru auction as people wont give a crap where it came from, its the brand on the front that matters when someone bitches that whatever they have bought has broken.

Richard rich.ms

Stu

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#453291 29-Mar-2011 21:51

When I worked for an importer of networking gear (amongst other things), we'd be supplied with a percentage of extra product. The extras were to cover any faulty items that may be encountered. Faulty items were then just destroyed.

freeviewfan

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#453791 31-Mar-2011 12:58

you should have gone in there and taken some man