June, 2009

Fundamentals of Receiving

Accurate inventory management is critical to a successful operation. It all begins with successful receiving management. Here’s how to do it right.

By Tom Fife

We all know the problems that occur when we abandon sound receiving procedures and principles. We end up with materials that are not ours and damaged materials that just seem to appear from nowhere. This costs us time, money and often a customer’s wrath. Just as a solid foundation is the key to a durable house, physical receiving is the cornerstone of a workable inventory.

Successful receiving management begins with having trained receivers who can spot and stop improper goods from entering our companies. If you can dedicate specific trained team members who are solely authorized to receive materials, you are ahead of the game. If you let just anyone receive you will end up with unloaders only. A small yard can decide on a couple of team members that are trained to carry out that function and the larger ones should have a receiving department that specializes in perfecting it almost solely.

Begin with the understanding that no materials should be accepted without proper paperwork from the company. Purchase orders are the most often used method of assuring that someone in your company has in fact ordered the items at your door. I always liked the phrase, “NO TICKY-NO LAUNDRY,” meaning that if there is no purchase order on file to do a proper check for correctness, do not receive the item. Perhaps you deal with someone who insists the receivers accept a shipment now for a Purchase Order to be written sometime in the not too-distant future?

I like a system where the purchase order from our company is pulled, matched, and given to the Vender’s driver to present to the receivers. Armed with a correct order, the receivers then need to:

Check the Vender’s shipment against the Company’s paperwork. Never check in inventory using the Vender’s paperwork.

• Check under the wrapping to expose any damage that may be there. Boards on the bottom often look as though a great white shark has taken a bite out of them. Accepting damaged goods takes a bite out of your profits.

• Do a count of the materials to assure quantity. The days of bunks with one count are over, by the way. Studs and OSB in particular can vary greatly in the bunk count; if you receive by the bunk over actual physical count, you will get burned.

Remember that although the vender driver’s time is important, it pales in comparison to the receiver’s responsibility
to do a proper check. Let them wait. When I was fairly new at managing the yard operations, I had an employee who had learned the basics of receiving and was put into the situation of running the department for a day. At the end of the day, I applauded his handling of the many trucks for that day. I was astounded by the small number of trucks that were kept waiting.

The very next day I found out why it seemed so good. We had wrong product for our company, we had materials that had not been ordered, and we had several orders that were shorted! He explained to me that he had so many trucks waiting with so many drivers complaining about needing to make other deliveries that he decided to just unload them to get them on their way without regard to any paperwork. This can happen frequently in the “heat of the battle,” even when we know proper receiving procedures.

A good safety measure is to stamp the Vender’s paperwork that the receiving is subject to count verification for correctness and damage within 24 to 48 hours, but that is no substitute for having the procedure and doing it right the first time.

We need to be certain that the inventory we’re storing is ours and not some receiving mistake that will cost even more in lost time, space and handling. A good inventory and operation begins with adhering to correct and proper receiving procedures.

I can help, just holler.

TOM FIFE is a 20-year veteran of the construction supply business and president of Unionville, Ind.-based Challenges Inc., a speaking, training and consulting firm. Seminar topics include employee motivation and retention, customer service, management skills and yard foreman skills. For additional information, call at 812.330.1640, e-mail tom@tomfife.com, or visit www.tomfife.com.