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Efficiently Receiving Products from a Purchase Order

· 4 min read
Michael
Admin

Receiving products from a purchase order (PO) is a crucial step in the procurement process. It ensures that the products delivered by the supplier match the agreed terms of the purchase order, helping businesses maintain accurate inventory and streamline operations.

What Does Receiving Products from a Purchase Order Involve?​

The process of receiving products against a PO involves verifying that the delivered goods match the order in terms of:

  • Quantity: Ensuring the right number of items were delivered.
  • Quality: Checking that the items meet the agreed-upon standards.
  • Condition: Confirming that products are undamaged and suitable for use.

Once verified, the receipt of goods is recorded to update inventory levels and proceed with payment.

Why is Proper Receiving Important?​

  1. Inventory Accuracy
    Proper receiving ensures stock levels reflect the actual inventory, preventing discrepancies.

  2. Supplier Accountability
    Any shortfalls or damages can be identified and addressed with the supplier promptly.

  3. Streamlined Financials
    Goods receipt is often tied to the payment process, ensuring suppliers are paid for the right quantities and quality.

  4. Operational Continuity
    Timely and accurate receiving prevents delays in production or fulfillment caused by missing or defective products.

Step-by-Step Process for Receiving Products​

1. Prepare for Delivery​

Before the goods arrive:

  • Confirm the purchase order details.
  • Notify the receiving team of the expected delivery date and contents.

2. Inspect the Delivery​

When the goods arrive:

  • Cross-check the delivery note against the PO to verify:
    • Product names and descriptions.
    • Quantities delivered.
  • Examine packaging for signs of damage or tampering.

3. Check Quality​

Inspect the goods to ensure they meet the quality specifications outlined in the PO. Reject defective or substandard items and notify the supplier immediately.

4. Record the Receipt​

Once verified:

  • Update the inventory management system to reflect the received goods.
  • Generate a goods receipt note (GRN) or equivalent documentation for record-keeping.

5. Report Discrepancies​

If there are issues, such as missing items, over-deliveries, or damaged goods:

  • Document the problem with photographs or notes.
  • Communicate with the supplier to resolve the issue, referencing the PO and delivery note.

6. Authorize Payment​

After successful receipt and inspection:

  • Approve the supplier’s invoice for payment.
  • Ensure all financial records match the received goods and PO terms.

Best Practices for Receiving Products​

  1. Use Digital Tools
    Leverage software like an ERP or inventory management system to track POs and automate goods receipt.

  2. Train Your Team
    Educate the receiving team on how to inspect deliveries and identify discrepancies.

  3. Maintain Clear Communication
    Establish strong communication channels between the procurement, receiving, and supplier teams.

  4. Conduct Regular Audits
    Periodically review the receiving process to identify inefficiencies or recurring issues with suppliers.

  5. Implement Barcode Scanning
    Use barcode or RFID systems to quickly and accurately verify deliveries.

Common Challenges and How to Address Them​

1. Incomplete Deliveries​

Challenge: Suppliers deliver fewer items than ordered.
Solution: Maintain a clear record of backordered items and follow up with the supplier.

2. Damaged Goods​

Challenge: Products arrive in a damaged condition.
Solution: Reject damaged items and request replacements or refunds promptly.

3. Mismatch with PO​

Challenge: Delivered goods don’t match the PO.
Solution: Communicate discrepancies immediately and review supplier performance.

Tools to Improve Receiving Processes​

  • SAP Inventory Management: For comprehensive tracking of goods received against POs.
  • Zoho Inventory: An affordable option for small businesses to manage POs and stock.
  • Fishbowl Inventory: Integrates with QuickBooks for seamless financial tracking.

Conclusion​

Receiving products from a purchase order is more than just unpacking a delivery—it’s a critical part of the procurement and inventory management process. By following best practices and leveraging modern tools, businesses can ensure accuracy, reduce errors, and maintain healthy supplier relationships.

Have you optimized your receiving process? Share your tips and experiences in the comments below!