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When looking for areas where operations can cut costs, most decision makers will focus on picking, packing, and shipping. This is understandable: picking, packing, and shipping require more labor and materials than receiving and storing, so efficiencies here tend to show up on the bottom line more directly.
Focusing solely on picking, packing, and shipping misses some prime opportunities, however. Doing so ignores the age-old wisdom that upstream causes have downstream effects.
In logistics operations, packing and shipping are operations that are fairly downstream—in fact, they are the last steps to occur before a customer receives his or her goods. For everything to go right during packing and shipping, a number of other activities have to occur, and occur correctly. Thus, mistakes made during receiving and storage will tend to cascade downstream and create problems during these more labor-intensive steps.
On the other hand, ensuring that you have the right quality control, automation, and storage at the receiving stage helps guarantee that your picking, packing, and shipping activities will be the most efficient they can be
Here, then, are some best practices when it comes to receiving that can dramatically improve downstream operations:
For many operations, facility managers aren’t even aware of incoming shipments until a truck arrives at their dock. This almost guarantees that unloading and storage will occur in a haphazard fashion.
Modern facilities integrate ERP purchasing systems and inventory software with Advanced Shipping Notices (ASNs), setting up alerts when incoming shipments are expected. This allows warehouse managers time to organize labor and plan for property accuracy, quality control, and storage.
What happens when the items that arrive are not exactly what was ordered? To ensure accuracy, employees in receiving need to be able to match what was ordered with what arrives. If there is a problem, they will be able to flag it on the spot and request an additional order, demand a refund, or send back unordered goods.
Furthermore, items should be entered into your WMS (Warehouse Management System) right away so that the software accurately reflects actual inventory levels. This will help prevent backorder situations, especially for popular or seasonal items.
Along with checking accuracy of the order and counts, individual items will need to be inspected, grouped, and possibly labeled. Damaged items should be estimated, noted, and compared against a predetermined benchmark for acceptable damage. For example, many facilities allow for 1% damage, based on a sample of incoming goods. Under that percentage, they will acknowledge receipt; over that, they will reject the shipment. Your facility will need to determine what is an acceptable limit for your industry and business model.
Quality control is even trickier for perishable items. During receiving, steps must be taken to ensure that lots are not mixed and that FIFO rules are followed. Lots need to be tracked through your facility in case a recall is issued.
Once items have been received, inspected, and catalogued in your system, they will need to be stored in the most efficient way possible. Available warehouse space should already be identified and readied. Popular or fast-moving items should be stored in such a way that they can be easily accessed by pickers, even when the warehouse is busy. Like items should be stored together, with individual lots clearly labeled. Shelf and pallet arrangements should make it easy to pick the correct items, depending on whether you use FIFO, FILO, or some other inventory accounting method.
All of these practices should be implemented in a way that minimizes the number of times that items have to be “touched”—including being inspected or moved. This cuts down on the possibility of human error.
Remember, receiving is not always an efficiency game. The goal is not to squeeze additional savings out of processes—and certainly not to cut corners. Rather, the idea is to automate and control receiving so that accuracy is guaranteed. When receiving does its job perfectly, the impact is felt downstream in the picking, packing, and shipping operations.
And it’s there that you’ll notice the savings to the bottom line. If you are looking to read more about setting up efficient receiving warehouse layout check our "How to Set Up an Efficient Receiving Area Layout!" blog post.
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