Receiving Controls
Receiving controls are measures and procedures implemented by businesses to ensure that the process of receiving goods and materials is accurate, efficient, and secure. These controls are vital for accurate inventory management, financial record-keeping, loss prevention, and ensuring the quality of received goods.
Here are some typical receiving controls that companies might implement:
- Purchase Order Matching: When goods are received, they should be matched with the original purchase order to verify that the type, quantity, and price of the items are as ordered.
- Inspection on Arrival: Upon receipt, goods should be inspected for damages, defects, or discrepancies. This is particularly crucial for perishable goods or high-value items.
- Segregation of Duties: Different staff members should be responsible for ordering, receiving, and reconciling goods to prevent potential fraud or errors. For instance, the person who places an order shouldn’t be the same person receiving the goods.
- Documentation: All received items should be promptly and accurately documented. This might involve updating an inventory management system, noting the condition of received items, or recording any discrepancies.
- Timely Reporting: Any discrepancies between the received goods and the purchase order, including damaged or missing items, should be promptly reported to both internal management and the supplier.
- Security Measures: Receiving areas should be secured to prevent theft. This might involve surveillance cameras, restricted access areas, or security personnel.
- Standard Operating Procedures (SOPs): Clear, written procedures should be established for the receiving process. This ensures consistency, clarity, and proper training for staff.
- Supplier Evaluation: Regularly evaluate suppliers based on the accuracy and quality of their shipments. Suppliers with frequent discrepancies might be reconsidered.
- Inventory Reconciliation: Periodically (e.g., monthly, quarterly), physical inventories should be taken and reconciled with recorded inventory levels to ensure accuracy.
- Training: Employees involved in the receiving process should be adequately trained on the company’s procedures, including how to inspect goods, update systems, and report discrepancies.
- Returns Process: Establish a clear and efficient process for returning defective, damaged, or incorrect goods to suppliers.
By implementing and maintaining strict receiving controls, companies can minimize errors, theft, and financial discrepancies while ensuring they get the correct products in the right condition from their suppliers.
Example of Receiving Controls
Let’s consider a hypothetical example to illustrate the importance of receiving controls:
BlueOcean Seafood Restaurant is known for serving fresh seafood dishes. Due to the nature of their primary product (seafood), it’s crucial for them to have stringent receiving controls in place to ensure quality, freshness, and accurate inventory levels.
1. Purchase Order Matching: Every morning, BlueOcean receives shipments of fresh fish. The restaurant manager checks the delivery against the purchase order to confirm they received the correct types and quantities of fish.
2. Inspection on Arrival: Given the perishability of seafood, the chef personally inspects each fish for freshness and quality, checking for clear eyes, firm flesh, and proper cold storage conditions.
3. Segregation of Duties : The assistant manager places the seafood orders, the chef inspects and approves the received goods, and the accountant reconciles the purchase order with the invoice.
4. Documentation: All seafood deliveries are entered into the restaurant’s inventory system, and the date, quantity, and type of fish are noted.
5. Timely Reporting: Once, a shipment of lobsters arrived, but two of them were not in good health. The chef immediately reported this to the supplier, ensuring a replacement or credit for the next order.
6. Security Measures: The receiving area at the back of the restaurant is monitored by a security camera, ensuring that all deliveries are on record and preventing potential theft.
7. Standard Operating Procedures (SOPs): BlueOcean has an SOP for receiving seafood, detailing every step from the initial check-in to storage, ensuring consistent handling of all shipments.
8. Supplier Evaluation: The restaurant manager evaluates suppliers quarterly based on delivery punctuality, seafood quality, and pricing, ensuring the best providers are retained.
9. Inventory Reconciliation: At the end of each week, the chef conducts a physical count of the seafood in the storage and compares it against the inventory system.
10. Training: New staff members undergo training, learning about the importance of handling seafood correctly, the steps in the receiving process, and the significance of reporting discrepancies.
11. Returns Process: There’s a clear process in place for returning any substandard seafood items to the supplier. The chef places such items in a designated cold storage, and the assistant manager contacts the supplier for a return pick-up or credit.
This stringent process ensures that BlueOcean Seafood Restaurant always serves fresh, high-quality seafood dishes to its customers. The receiving controls not only protect the brand’s reputation but also ensure financial accuracy and operational efficiency.
