GPI 127 – Ensure you are billed for what you really received – get two independent counts in receiving.

Save (0)
ClosePlease login
A-   A+

Vendor shipping errors are costly when not discovered on the day of receipt.  One area of purchasing that gets little notice and costs all companies are shipping shortages or wrong shipments not detected the day of receipt.  Pricing errors occur occasionally but are normally found quickly by comparing an invoice to a purchase order.  Shipping errors are much more difficult to detect due to the type of product and the quality of receiving personnel and depth of internal controls in place.

If shortages are not caught upon receipt and the vendor’s invoice matches the receiver, your company loses.

Employees frequently lie when overloaded with work.  Employees sometimes become overwhelmed about counting incoming loads.  This is not because they want to but are forced into a box when faced with multiple incoming trucks.  There are times they are understaffed, people call in sick or the work load gets overwhelming.  When a company orders 10,000 pieces, you can teach your receiving personnel to measure out 50 or 100 and extrapolate pieces by weight of the sample.  The problem lies in checking those receiving people to ensure they at least performed the weight test extrapolation.  When they do not, you will not catch shortages until long past the invoice has been paid and check mailed.

Employees when short-staffed in receiving skip steps.  Employees with trucks backed up and people complaining of them will sometimes decide to mark items received as shipped without verifying real counts.  They justify their actions because they are not manned enough to handle the load and their supervisor does not understand his role to gather adequate resources when needed.

Shortages sometimes do show up long after it is too late.  Shortages appear weeks or months later maybe on a different shift and quickly ignored or forgotten.  This is bad and needs to be addressed since shortages need to be reported to vendors regardless of the time lapsed.  The more quickly a shortage is reported, the more likely the company will get a credit back and not have to pay for it.  Shortages of parts, bad or defective product or missing supplies all go unreported most of the time and are only discovered at yearend during the annual audit.

Get two heads to count select or expensive items obtain independent check numbers.  Unless you have two independent counts on difficult items, you run the risk of personnel skipping their duties.  The accounts payable person can only go by a receiving person’s word before making a payment.  The receiving person nods when accounts payable asks, “Did we get this” and the invoice gets paid as billed with no further question.  A surprise audit, second independent counts and an occasional switch in job responsibilities will reveal when personnel are not doing all critical tasks as defined in their job description.

Questions to ask the company’s receiving personnel about workload, skipping procedures, etc.

  • As a receiving person in the receiving department, are there times when the work load becomes too heavy, everyone is busy in receiving and you need one or two extra people for the additional load?  When that backlog occurs, what do you do?
  • As a receiving person, on days when it is very busy and trucks are backed up, if you ask, do you get the extra help for the time needed to properly receive all incoming shipments?  If not, are you told the reason?
  • When it is busy in your department on days with multiple truck loads and lots of different difficult parts to count, are there times that you are unsure if the company received everything that was ordered?
  • As a receiving person, do you physically count everything that comes through the receiving dock?  If you do not count the items yourself, who helps on days when you are short of help?
  • Do you ask for help on busy receiving days?
  • Where do you believe there is the most risk in the receiving department?

 

Is there anything we missed?

How would you improve the idea above ?

OR Log in With

IDEA OF THE DAY
SIGN UP FOR THE "Best ideas" NEWSLETTER

Get the best new business ideas sent to you daily.

SIGN UP
SUBMIT AN IDEA

Here’s an opportunity to contribute your best idea to boost a company’s bottom line, and maybe qualify for a weekly award.

saved article

My Bookmark Category

  • Please login to view Category

  • Great Profit Ideas