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36
ACCOUNTING

The $52 Toilet-Paper Roll and Other Hazards of Closed Books

A company discovers an error in its accounting system when it opens its books to employees.
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When Pace Industries' Cast-Tech division decided to open its books and start teaching employees how it made money, one of the first steps was to assign responsibility for specific lines in the income statement to different people. Todd Young, safety coordinator, and Danny Hardcastle, the plant's custodian, drew the category of "janitorial supplies," which had been running about $8,000 a month. That seemed high, they thought. The biggest expense was for toilet paper. How much toilet paper could 300 people at a factory in Monroe, Mo., be using? Sure enough, when they investigated they discovered that the accounting system was ringing up the cost of a whole case of toilet paper, $52, whenever someone went to the stockroom to get a new roll. By fixing that problem and finding other ways to economize with more judicious purchasing and reuse, Young and Hardcastle brought the cost of janitorial supplies down to a few hundred dollars a month -- and Pace stopped flushing money down the toilet.

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Last updated: Apr 1, 1995




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