Receiving of incoming goods


Receipt of goods in a working environment is a very important exercise since it accounts to verification of consignment from various quarters.  It calls for authorized personnel from various distinct departments to witness the entry process of the goods in question. The essence of advocating different personalities to come and check the goods is purely geared to enhance transparency and accountability in the whole process.

Categories of receiving

  • Receiving from supplier:

Once the buying company gives out the order to a specific supplier, its upon the supplier in question to find modalities of delivering the consignment to the company. The stores department together with accounts/user/quality departments inspects the goods in question to confirm whether they correspond with the outlined specifications.  The receipt of goods is only effected if the goods in question are in line with the company’s requirements. Conversely, if the goods are defective or wrong supply then the inspection team rejects it.

  • Receiving from sub stores:

Sub stores entail small stores houses which are put in place to serve distinct customers within a company. Most of the sub stores entail goods based on different materials. This means that the provision of service is basically in line with different range of customers.

  • Receiving from departmental store:

In some companies the receipt of goods may be based on departmental store which channels all the goods to respective entities. The issuance of goods may be based on consumption patterns of different users who are targeted. In manufacturing company departmental stores serves distinct users who are primary beneficiary of such goods.

  • Receiving from customers:

Goods may be received from customers in the following ways. One, in a situation whereby a customer brings forth his own goods to used in manufacturing of his product, secondly a customer may bring goods to be received in some cases whereby his final product happens to have some short comings and that fixing of the same becomes necessary.

  • Transfers from other storehouses:

Goods are transferred from other storehouses to other respective departments within the company. This attribute arises in a situation whereby a specified department happens to have some shortages of the products or perhaps if the goods in question are deemed to be obsolete and that there is a need for recycling them.

  • Returns from production of other department:

In some cases the production department returns goods that are deemed to be obsolete to stores department for disposal. Goods in question may be disposed through re-sale, auction, re-cycling etc.

  • Scrap arising:

Scrap entail waste, reprocessed materials in a production function. Ideally, materials are deemed to be scrap when they are no longer needed in perfection of different functions. Its upon the production operators to give out details pertaining the materials in question in order to facilitate a replacement of the same based on the ideal materials to be used.

Vendor quality rating:

These encompass modalities used by companies to appraise suppliers. Vendor rating is the result of a formal vendor (Supplier) evaluation system. Vendors are invariably given standing, status or title according to their attainment of some level of performance. The key variables used in a supply chain set up entail:

  • Quality status i.e. conformance to specifications
  • Quantity- rate of order fulfilment
  • Time- lead time
  • Price competiveness.

The main objective of vendor rating are:

  • To motivate suppliers to improve performance
  • To apportion orders to deserving vendors for overall cost reduction
  • To select vendors for further development
  • To reduce the cost of inspection of incoming lots by modifying sampling plans

Marshalling of receipt:

This entail proper package of receipts which are used in a supply chain set up. This exercise is paramount since it shows the reflection of company’s transactions in a given time period.

Receipt of capital items:

Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption. Capital goods, then, are products which are not produced for immediate consumption; rather, they are objects that are used to produce other goods and services. These types of goods are important economic factors because they are key to developing a positive return from manufacturing other products and commodities. Because of high financial clout associated with the acquisition of capital items key personalities in a company’s undertakings should be involved in receipt of the goods. This entail receipt of goods by board of directors, chief executive officer (CEO) of the company and also Top level managers.



Means examination, scrutiny, surveyor  probe on goods , services and works by observartion, sensing, gauging, testing, measurement, weighing There are several categories of inspection:

  1. Inspection for quality:

When goods are dispatched to the buying company, normally clear examination is carried out to establish whether the consignment corresponds with the stated features by the company. The user department and perhaps the quality team of the buying company confirms the quality status of the supplied goods. If goods confirm to buying company’s requirements its upon the inspection team to endorse the receipt of the goods. However, if the goods does not confirm to the requirements then the goods are returned to the supplier.

  1. Inspection for quantity:

The quantity status is also very important aspect in inspection of the goods. Ideally, the buyer invariably expects the suppliers to dispatch all orders of the goods in order to bring forth the aspect of order fulfilment and perhaps ensure smooth flow of company’s operations.  The stores personnel in liaison with other members of the inspection team is duty bound to cross check whether the physical supplied goods corresponds with what is replicated in the delivery note. After confirmation is entitled to sign accordingly.

  1. Inspection for damages:

The members of the inspection are also entitled to examine whether the goods supplied are free from defects. This exercise is normally done before signing the delivery note. The buying company through the report of the inspection team is only reliable to accept only those goods which are fit for consumption. The damaged goods are exchanged by the suppliers to facilitate the aspect of order fulfilment for the transaction.

  1. Who may inspect:

Ideally, in a receipt of goods exercise stores personnel, accounts representative and a representative of the user/quality department should be present. Normally, the stores personnel cross checks the quantity status, the accounts personnel checks quantity/the pricing of the goods while the user/quality personnel examines the quality status of the goods.

  1. Where goods may be inspected:

Most of the company’s policies is based on ensuring that all the goods are inspected at the stores bay since its the central point where transparency and accountability can be sustained in line with the supplied goods.

  1. Spot checks:

In some cases companies allow random examination of the goods in any specific point before goods reaches the stores. This attribute is also geared towards provision of transparency and accountability in line with the supplied goods.

Inspection and receiving procedure

  1. Appointment of committee
  2. Identification of what to be inspected
  3. Identification of what methods to be used inspected
  4. Collection of all documents needed
  5. Actual inspection starts
  6. Inspection report compiled
  7. Action taken ie reject or accept
  8. Followups


Documentation used in inspection:

  1. Advice note:

This is a note sent to a customer (Buyer) by a supplier of goods to advise him that an order has been fulfilled. The advice note may either accompany the goods or be sent separately. Also an advice note notifies the buyer that goods have been dispatched or are ready for collection. Copies of the advice note may be sent to relevant departments e.g. purchasing and stores

  1. Local Purchase order:

A local purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller usually forms a one-off contract between the buyer and seller, so no contract exists until the PO is accepted.

Reasons why companies use    LPOs.

  1. They allow buyers to clearly and explicitly communicate their intentions to sellers and protect the seller in the event of a buyer’s refusal to pay for goods or services.
  2. Sets out in writing the items ordered
  3. Sets out the prices of the items ordered
  4. Sets out the manner of delivery
  5. Shows the terms of payment e.g. by cheque or cash
  6. Evidences the person who signed it and therefore this shows the person to take responsibility for it
  7. Allows the receiving department something to check against when the goods arrive
  8. Allows the paying department something to check against before making payment
  1. Consignment note:

This is a document prepared by a consignor (Supplier) and countersigned by the carrier as a proof of receipt of consignment for delivery at the destination. This document evidences the receipt of the goods an attribute which shows the truthfulness of the actual delivery of the consignment from the consignor to the consignee. The document is generally used as an alternative to bill of lading (especially in inland transport), it is generally neither a contract of carriage nor a negotiable instrument.

  1. Delivery note – What is a delivery note?

Definition: A document accompanying a shipment of goods that lists the description, grade, and quantity of the goods delivered.

A delivery note describes what a package contains – including a description and the quantity of goods delivered. It also describes whether or not there are some goods that are not enclosed – therefore giving an overview of what the recipient has ordered and what has been sent to them.

In some cases, a copy of the delivery note is signed by the recipient and then returned to the seller or consignor as a proof of delivery.

  1. Requisition:

The stores staff/field staff or user department(s) initiates purchasing through preparation requisitions. Requisitions entail the code number of materials, description of the materials, quantity to order as well as the reason for ordering.



  1. Request for quotation (RFQ):

This is a document sent by the buyer to the supplier requesting the supplier to quote the prices accordingly. It is important to note that the RFQ should have clear information pertaining the items to be purchased. This should involve correct contacts of the supplier, ideal specifications and also the quantity to be purchased. The document can be accompanied by other documents such as drawings, any additional information which enables the supplier to quote as per the buyer’s request.

  1. Inspection Certificate
  1. Quotation enquiry:

Formal statement of promise (submitted usually in response to a request for quotation) by potential supplier to supply the goods or services required by a buyer, at specified prices, and w ithin  a specified period. It may also contain terms of sale and payment, and warranties. Acceptance of quotation by the buyer constitutes an agreement binding on both parties.

  1. Goods receipt note (GRN):

This is a document used to record the inward entry of any goods received at the premises of the organization. The document normally consist of the details of Quantity Received, Quantity Rejected and Quantity Accepted, Supplier name and Purchase order number. The practice of preparing GRNs is important as it promotes proper inventory control and restricts the unwanted, unauthorized entry of goods in the organization. The GRN preparation is a part of effective Inventory Control Management.

Other documents in purchasing

  • Quotation a nalysis
  • Delivery Note
  • Invoice
  • Credit Note

Management of purchasing records:

Management of records is the practise of maintaining the records of an organisation from the time they are created up to their eventual disposal. The practise of records management involve planning, organising, controlling and most importantly provision of authority to the ideal people who should access the records in question. Purchasing records are concerned with the storage of information. This information can be filled manually or through computer system. Computerization enables vast amounts of information to be stored, obviates duplication and ensures efficient retrieval of data. The distinct ways in which purchasing records may be managed entail:

  1. Filing of the records
  2. Updating of the records
  3. Archiving of the records
  4. Provision of security for the records
  5. Classification of the records
  6. Provision of tracking mechanism for easy retrieval of records
  7. Disposal of records


  1. Certainty
  2. Checking deviations  b/t Lpo and delivery note
  3. Control quality of products at early stages
  4. Embracing technologies like J.I.T
  5. Better inventory mgt



  1. Sampling method
  2. Receiving goods
  3. Inspecting goods



  1. Outright rejection
  2. Replacement
  3. Resourcing
  4. Reduction in price


  1. Outright rejection
  2. Replacement
  3. Resourcing
  4. Reduction in price


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