Receiving Process in Distribution Centers

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Summary

A considerable number of factors affect the commercial efficiency of the modern enterprise, among which special attention should be paid to the establishment of supply chain management. The final volume of sales, consumer demand, and market activity depend on how smoothly the sales and transportation of goods are handled. Obviously, the productivity of distribution centers is important to manufacturers, allowing them to sell products in different locations, countries and even continents. This paper critically analyzes the procedural stage of product acceptance of a situational FMCG distribution center in the context of product realization. The text is a useful resource for pulling together the various logistical principles and key processes and provides a matrix of key performance and perspectives on distribution center automation and processing.

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The Stage of Receiving

When a large shipment arrives at a distribution center, the complicated and time-consuming process of managing resources at the warehouse base begins. All warehouse logistics come from the receiving zone, where goods are traditionally delivered by the manufacturer’s trucks or outsourced transportation companies (Walker, 2018). It is pertinent to clarify, however, that such deliveries are rarely regular and scheduled but instead are made as ordered by the distribution center.

Once the food truck arrives at the pickup zone, the shipment is handed over, and the manifests are signed. As a rule, the waybills contain a description of the appearance of the goods, their fragility, and quantity. For further accounting, it is crucial to record the date, time, any discrepancies, and the delivery partner’s name in the receiving report. Thus, the warehouse technician is responsible for receiving the goods, reconciling the correspondence between the reports and the actual delivery, and signing declarations.

At first glance, receiving goods into a distribution center may seem such as a relatively straightforward process, but in reality, it involves many key features. For instance, due to the geometry of the distribution center, which is represented by a two-story building, boxes of products can only be carefully lifted to the first floor for further processing using mechanical elevator platforms (FAD, 2019). On such equipment, it is essential to achieve high reliability of good fixation since the process of vertical lifting is associated with physical risks.

Further stages of the reception are visual quality control combined with product registration in the distribution center’s database. A forklift can be used to move goods from the loading zone for further processing, allowing the transport of heavy batches over short distances. In reality, the goods received are densely packed in boxes, and not every one of them can be opened for detailed inspection. In such a case, warehouse specialists conduct a visual analysis of the integrity of the cardboard or plastic packaging (Safer storage systems, 2020). Once the inspection is complete and all potential damage is recorded, it is necessary to register the goods in the distribution center’s database. For this purpose, a traditional tool is the scanning of a unique tag, which carries commercial information about the goods: barcodes or RFID.

Using handheld scanners, specialists enter the information into a database, which automatically allows the distribution of goods on existing orders. Once the computer system indicates to which block of storage space a shipment needs to be moved — equivalent to allocating resources to customers — the specialists use a forklift to move the products to the storage zone, which completes the receiving process at the distribution center.

The process of receiving goods and raw materials is one of the key stages in the supply chain and sale of goods. Receiving includes several vital steps, such as checking the good condition and conformity of goods, registering, placing in a warehouse or relocating them for further transportation, as well as repackaging and preparing for sale (Kulińska & Giera, 2019). Consequently, a mistake or delay in any of these stages can harm the further distribution of the goods and cause losses for the company. For this reason, there are several risks that must be taken into account when building the performance matrix and the subsequent distribution and sales schedule.

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First, the warehouse may receive unsolicited goods or materials with poorly filled documentation. In both cases, receipt of these goods will result in delays in sorting and distribution, as unsolicited goods take space but cannot be transferred further down the supply chain due to non-compliance (Kulińska & Giera, 2019). Ill-filled documentation also requires rewriting or makes distribution impossible due to a lack of quality assurance. Avoiding these risks can be ensured by employees training to check the documentation for compliance with standards before receiving, which shifts the blame to the supplier and reduce the financial and time costs for re-transporting goods.

Secondly, the warehouse may receive damaged goods, products of poor quality, or hidden defects. The transfer of such goods through the supply chain can damage the company’s reputation with distributors and customers. In addition, even if deficiencies are discovered at the stage of repackaging or providing goods to distributors, the company may suffer losses due to the inability to prove that the goods were of low quality or damaged by suppliers. Consequently, training personnel to determine the quality of goods before signing documents and organizing their work with large volumes of materials will allow the company to save money and time. These savings are possible due to avoiding courts with suppliers, storage of goods in a warehouse, and their return transportation or disposal.

Another risk is associated with the warehouse’s internal operation, namely, damage to goods or raw materials while receiving them for storage. In this case, the fault for damage to goods that cannot be used for distribution or need to be repaired lies with the company, and there is no possibility of compensation. Therefore, investing in the purchase of quality transportation equipment and personnel training is a necessity to avoid this risk (Kulińska & Giera, 2019). In addition, incorrect labeling and placement of materials can also be included in the category of internal errors, which will complicate and increase the time of its further transportation and can lead to accidental delivery errors. In this case, the company will spend a significant amount of time and money returning the goods and delivering the required order to distributors. These risks can also be eliminated by investing in scanners and labeling equipment, developing user-friendly registers, and staff training.

Therefore, this analysis demonstrates that the process of receiving goods includes many stages that affect the performance of the company. All stages of obtaining have risks, which, however, can be avoided by the correct organization of work and staff training. In this case, even if delays occur on the part of the suppliers, they will be covered by the compensation specified in the contracts and will not harm the company’s profits.

Optimization of the Stage

Recognizing the critical importance of such a key logistics stage, it is necessary to highlight the main parameters of its efficiency. The matrix of key performance metrics for receiving is shown below. Meanwhile, it is clear that in market development conditions, distribution centers must be optimized and easily adaptable. The major trend in this area is digitalization: for instance, to manage large volumes of resources, the warehouse can switch to cloud databases that simplify resource accounting (Storage, 2020). In addition, distribution centers should invest in the development of automated processes, including using robotic technology to produce receiving and sorting. Other promising directions for the center are strengthening direct deliveries to customers bypassing retailers, and efficient use of space.

Key Performance Matrix of the Receipt
The cost of receiving on the line The higher the number, the lower the work efficiency.
Receiving performance Performance must increase progressively.
Receiving accuracy Falling accuracy is associated with a supplier selection problem.
The efficiency of movement through the warehouse A lower number of operations characterizes more thoughtful warehouse logistics.
Receiving cycle time The longer the time it takes to receive, the lower the productivity of the area.

References

Bhasin, H. (2019). What is distribution center: Role, advantages, and disadvantages. Web.

FAD. (2019). Warehouse equipment checklist: What you need to know. Web.

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Kembro, J. H., Norrman, A., & Eriksson, E. (2018). Adapting warehouse operations and design to omnichannel logistics. International Journal of Physical Distribution & Logistics Management, 48(9), 890-912.

Kulińska, E., & Giera, J. (2019). Identification and analysis of risk factors in the process of receiving goods into the warehouse. Foundations of Management, 11(1), 103-118. Web.

Safer storage systems. (2020). Receiving and inspecting goods. Web.

Storage. (2020). Warehousing and logistics trends. Web.

Walker, M. (2018). Spotlight on: 7 key warehouse processes. Web.

Zhang, H., Xiong, Y., He, M., & Qu, C. (2017). Location model for distribution centers for fulfilling electronic orders of fresh foods under uncertain demand. Scientific Programming, 2017(1), 1-13.

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BusinessEssay. 2022. "Receiving Process in Distribution Centers." September 19, 2022. https://business-essay.com/receiving-process-in-distribution-centers/.

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