Implement a Vendor Compliance Program

When you consider the average warehouse receives, counts, and inspects thousands of items of varying shapes and sizes from hundreds of vendors whose picking, packing, and shipping practices are all different, it is not surprising receiving can be one of the most complicated functions in the warehouse. You’ve probably heard reference to the GIGO concept. Garbage In, Garbage Out. From a warehouse process flow perspective, this means errors in receiving, unlike most other errors in your warehouse, have a ripple effect. If you can’t get your receiving process working smoothly, you’ll quickly run into scenarios where product will be sitting on your receiving dock, or on pallets in a corner while your pickers waste time searching for the inventory. This can result in lower labor productivity, poor space utilization and reduce customer service levels. And your dock-to-stock metric will be lowered.

While there are many ways to help streamline the receiving process, I suggest you first attempt to collaborate with your vendors and map out a plan for efficiency and success. How your vendors ship product to you strongly affects the fate of your receiving operations and even the profit of your company. For example, when a shipment arrives requiring extra handling, the receiving process is slowed. Your profit decreases while the chance of a receiving error increases.

Vendors’ shipping decisions/actions can really impact your business. Consider the following examples:

1. Do your vendors pack multiple items in a single carton?
2. Do they omit packing lists with their shipments?
3. Are items incorrectly packed or marked?
4. Has defective or damaged product ever arrived at your warehouse?
5. Are shipment counts incorrect?
6. Have vendors ever missed delivery dates?

Too many incorrect answers to these questions and you’ll find your gross margins shrinking and your profitability drying up.

Too many incorrect answers to these questions and you’ll find your gross margins shrinking and your profitability drying up.

Ideally receipts from compliance certified vendors can be received with minimal effort, meaning no counting, no repacking, no validation. Assuming the products, cases and/or pallets are pre-labeled, you simply scan, enter or validate the quantity, and put the product into a staging or storage location. With the right technology in place, you can further improve the receiving process flow by using advanced ship notices or ASN. An ASN from your supplier is an electronic document (e-document) of the shipment (your receipt). If you are talking with your technical support team, they may be familiar with the reference 856 transaction. This e-document can be used to facilitate a single scan of the receipt and potentially eliminate scans for each product and associated quantity. Afterall, if your vendors are certified, there is a high probability what they are sending is accurate.

Setting up a vendor compliance program requires planning and on-going management. Using ASNs requires more advanced technology for your and your suppliers. However, the potential benefits to your operations can be significant.