Small manufacturing businesses often face delays in receiving raw materials, managing inventory, and maintaining quality during the goods receipt process. An effective goods receipt process requires monitoring of suppliers' activities, verifying the quality and quantity of goods when they arrive, and managing a smooth supply chain.
In this blog post, we will learn the ways to simplify your goods receipt process by identifying the challenges and the best practices for maximum efficiency.
Understanding The Goods Receipt Process
The goods receipt process is a set of activities that are conducted when materials are received from the suppliers. It takes place when a PO (Purchase Order) is made, and the supplier delivers the material to the manufacturer as requested. The receipt of goods involves monitoring the procurement life cycle, which includes receiving raw materials, unloading the goods, checking their quality, verifying the quantity, and storing the products at the warehouse.
It helps to simplify the procurement process by allowing you to receive quality products in the right quantity for manufacturing. The goods receipt procedure helps in effective inventory tracking, multiple warehouse management, supply chain management, and maintaining the inventory level.
Read more about Goods Received Note (GRN) | Good Receipt Note | GRN Format : Explained
Key Components Involved in the Goods Receipt Process
Here are the key components that will help you simplify your goods-receiving process.
- PO (Purchase Order) Verification: The PO details are needed to match as soon as goods are received.
- Goods Inspections: Manufacturers need to verify the quality and quantity of each item.
- GRN Creation: You need to create Goods Received Notes, a document with details like supplier information, product details, and delivery time.
- Record Update: Update the inventory records with the new stock level to maintain the goods receipt process flow.
- Problem Identification: Address any issues between purchase orders and received goods, which include goods receipt example like damaged items or incorrect quantities.
- Clear Communication: Coordinate with your procurement and finance department to solve the issues smoothly and have continuous communication with your supplier to reduce the chance of issues.
What Are The Steps In The Goods Receipt Process?
Knowing the components can be important for the goods receipt process, but using the right approach can simplify your operations. Below is the strategy for receiving process steps to help you receive goods on time and maintain effective inventory.
Step 1: Initial Receipt of Goods: Verify the purchase order details with the supplier on arrival for the goods received receipt.
Step 2: Inspection and Verification of Goods Received: Implement a verification process in your goods receiving process steps to identify the quality and quantity of the materials and identify any issues.
Step 3: Documentation and Updating Inventory: Prepare a goods receiving note including all the details of the goods receipt inspection, such as the number of perfect products, defective goods, supplier details, and more, and update your existing inventory level.
Step 4: Handling Discrepancies: Create additional documents for damaged or defective materials and send them to the finance department.
Step 5: Storage and Organization: Prepare a space in your warehouse to store all the physical material and maintain an effective inventory level.
Challenges For Successful Incoming Goods Receipt Processes
Lack of following the right process of goods receipt for purchase order can cause many challenges:
- Inaccurate Documentation: Inaccurate information or incomplete POs can lead to delayed procurement, stock shortages, or increased costs in warehouse management.
- Miscommunication With Supplier: Inaccurate agreement or miscommunication with the suppliers can affect the goods receipt process, causing delays, reviewing the wrong product, or fault in the delivery.
- Space Usages: SME manufacturers face challenges in using the empty storage space effectively, which leads to difficulty in handling goods on arrival.
- Data Handling: Using legacy software and ERP infrastructure makes it difficult to store the required goods receipt for purchase orders and access the data when required.
- Supply Chain Management: Lack of communication with suppliers impacts the overall goods receipt in procurement process, which leads to ineffective supply chain management.
Smart Solutions For Optimizing Your Incoming Goods Receipt Process Flow
Receiving goods and verifying each item can be time-consuming. You need to automate your goods receipt process flow by integrating some of the effective solutions as mentioned below.
1. Goods In And Out Solution: It can help you speed up your document verification process by electronically updating the goods receipt in procurement and reporting about inventory in real-time.
2. Inventory Management Solution: It allows you to monitor the stock level and make spaces for new materials. Inventory tracking solutions can help you gather information on the goods level in real-time and identify non-performing goods to make spaces for storing new goods.
3. RFID And Barcode Systems: Using RFID (Radio Frequency Identification) and barcode systems can help record information about good receipt purchase order electronically and identify issues within no time. It will help you automatically maintain the records as soon as the goods arrive at your warehouse.
4. Warehouse Management System: Location management becomes important when you are handling multiple storage spaces. You can implement the best warehouse management software to improve your space management and reduce time spent on product accessibility.
Benefits Of An Efficient Goods Receipt Process
An efficient goods receipt process helps you improve other manufacturing processes, such as inventory management and quality control. It allows you to improve finance management, including the following benefits:
1. Inventory Accuracy: An efficient goods receipt process allows you to update your inventory levels when you receive new stocks from suppliers and make sure to fulfill the terms of your purchase orders. It helps you improve your data accuracy and access updated inventory reports at a place.
2. Reduced Costs: It helps you reduce manual errors and verify the details of invoices to identify discrepancies. This saves you costs by reducing human involvement and misunderstandings.
3. Improved Supplier Relationships: The goods receipt process helps you analyze your suppliers' performances by evaluating previous GRNs. It helps to improve CRM (Customer Relationship Management) with your suppliers.
4. Enhanced Compliance: It allows you to record your previous inventory management, purchasing, and payment activities so that you can make informed decisions and comply with industry standards.
Best Practices For Optimizing Goods Receipt Process
Here are the best practices that will help you make the right strategies for your business.
1. Automation: Implement a software solution in your manufacturing business to automate your goods receipt procedure and reduce manual errors, especially for tasks like data entry and product verification. It will help you speed up processes and improve accuracy.
2. Standardized Procedures: Set guidelines to handle the receipting of goods and verifying or recording them in the system in a systematic manner.
3. Integration with Procurement: Integrate your goods receipt process with procurement systems to access real-time updates. Verify goods receipt for purchase orders and make the right decisions to improve efficiency.
4. Regular Training: Provide regular training to your employees to make sure they can efficiently operate the software and handle good receipt purchase orders following the right practices.
Simplify Your Goods Receipt Process With TranZact
Manufacturing businesses need to conduct a strategic procurement life cycle for effective production that includes purchase order creation and receiving the goods. TranZact sales and purchase solutions include a procurement management system that helps you simplify the goods receipt process by verifying it matches the actual purchase request.
Understand How TranZact helps with GRNs and Quality Checks
You can automate the verification of goods, easily create GRN, communicate better with the supplier, and do many more things. Choose TranZact now to make your goods receipt procedure easy while receiving the right materials and maximising efficiency.
FAQs
1. What is the goods receipt process?
The goods receipt process is the activity that involves analyzing delivered products from suppliers and verifying their quantities, qualities, and other terms as mentioned in the purchase orders.
2. How can I improve the efficiency of my goods receipt process?
You can improve the efficiency of your goods receipt process by using software solutions to automate and speed up tasks and reduce errors. Make sure to conduct inspections effectively, identify issues like delays and defective products, and find ways to solve these issues.
3. What is a goods receiving note, and why is it important?
A good receiving note is a document you create to analyze whether the goods you receive from suppliers match the criteria of the purchase order. It is important to identify defects, update inventory levels, and improve payment processes.
4. What are the benefits of optimizing the goods receipt process?
The benefits of optimizing the goods receipt process are as follows:
- Reduces manual errors and waste
- Analyzes supplier's performances
- Better inventory management
- Improves quality control
- Avoids misunderstandings in payments
5. How does optimizing the goods receipt process impact procurement?
Optimizing the goods receipt process improves your procurement management. It helps you select the right suppliers, receive products according to your purchase orders, restock inventory on time, and verify invoices.
6. What is a goods receipt inspection, and why is it important?
Goods receipt inspection means checking the quality, quantity, and other specifications of products you receive from the suppliers. It is important to identify defects and receive only those products that satisfy the conditions of purchase orders.
