What it is:
In the business world, abnormal spoilage refers to the unusual loss of goods or work in progress.
How it works/Example:
Company XYZ is a restaurant chain that orders a
In the last three months, however, Company XYZ has noticed that the spoilage rate has spiked to 15%. After performing an of its stores, Company XYZ determines that the managers at several locations were keeping the refrigerator too warm in order to reduce the stores' electricity bills. This was leading to abnormal spoilage.
Why it matters:
Abnormal spoilage is aflag. Companies must find ways to detect and measure spoilage in order to keep costs under control, and if spoilage suddenly becomes abnormally low or high, this may be a sign of larger underlying problems in the manufacturing process. Abnormal spoilage reduces profits.