As one of the fundamental business processes, a goods receipt process whilst not intrinsically complex can be vitally important in ensuring an efficient flow of materials. The process usually involves matching received goods against a purchase order, verifying their quality and technical attributes. Given its importance within the material flow its perhaps unsurprising that it can represent one the most common bottlenecks often causing delays and frustration.

What is the goods receipt process?

When a supplier ships the materials ordered they are usually received by the goods receiving team who must process them before they can be made available for issue. What actually gets checked can vary from company to company, some may merely check for signs of transit damage – others may carry out a detailed quality assessment whilst others will look to match shipping documentation with the item against the original PO (this is especially true where part of the purchase terms include attributes such as shelf life or technical requirements that must be verified).

Often the goods receipt process is divided into two sections. Initially the packaging and documentation may be checked before forwarding the part to the QA team for more detailed assessment. This two step process has the benefit of ensuring that once the package is verified as acceptable the purchasing team can be advised that the item has arrived which stops any unnecessary expediting.

Next the business needs to be content that the materials are as ordered whilst also being fit for use. With most organizations operating some variation of MRP or ERP system the goods receipt will usually be raised on the system – effectively closing down the purchase order line and allowing any applicable purchase invoice to be paid.

Where receipts result in identifying faulty materials or do not meet what was ordered the goods receipt process should prevent these items being accepted for use and the supplier being paid. The organization will usually have a goods returns process for returning goods to suppliers that fail the goods receipt process.

Key Goods Receipt benefits

The benefits of an efficient Goods receipt process are fairly straightforward

1/ It prevents poor quality or defective materials entering the organization
2/ It is the first step in the materials handling and stocking process
2/ It enables the finance team to be aware of when an invoice can be paid
3/ It communicates to the purchasing team that an order line is closed
4/ It captures information that can be used to calculate common KPI’s such as delivery schedule adherence.

Summary

The ‘Goods Receipt Process’ is a fundamental process in many organizations – it is the commencement of the materials handling process, prevents poor materials entering an organization and acts as a communication tool to instigate payment.

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