Why Companies Waste Money on Purchases and How to Fix It

Most grownup professionals are smart people, but that doesn't mean we don't do some really stupid things from time to time. Think about your last expense report. Between filling out the forms, supervisors checking them, accounting reviewing them again (and sending them back five times because you used the wrong code for the rental car company), companies spend vast sums of money every year in hopes of preventing someone charging a bottle of cold medication back to their employer.

Procurement in manufacturing is similarly penny wise and pound foolish. At the Grainger Show in Florida in March, one poster showed how the average company uses seven people and $100 in approvals and management time to buy a $17 hammer. Sound familiar?

In a series of wide ranging conversations at the show, IndustryWeek's Robert Schoenberger and New Equipment Digest's Laura Davis spoke with:

• Sam Johnson, group vice president for Customer Solutions at Grainger
• Barry Greenhouse, senior vice president of Merchandising and Supplier Management
• Rick Sigler, vice president of Onsite Services
• Stan Solowski, vice president of Value-Added Solutions
• Derek Hamilton, vice president of Onsite Operations

Full disclosure, Grainger did not sponsor this episode, but the company did cover travel costs for editors to attend their customer event.