How to optimize your goods receipt process

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Why ERP or WMS do not solve all your issues?

A company that had just installed one of the best ERP called me after a few months of running it. They were unable to use the ERP for planning because, whenever they did, the production stucked at one operation, due to missing raw materials.

Of course, everybody was blaming the system. It was badly configured, they told me. So, I made a detailed analysis of the system. After a few days of checking absolutely each single customizing setting, I only find a few small mistakes that could not explain the situation described.

So, I decided to take my workshop shoes and my helmet and go to the shop floor to see what was really happening there. A few hours on the shop floor would have saved me half of the time spent on my desk.

> The conclusion was clear: the stock was never accurate

The first area that came under scrutiny was the goods receipt. So, I’ll explain how it was and what we did to optimize this area. In a production company, there are three types of goods receipts:

  • From purchase order
  • From production
  • From customer returns

Goods received from purchase orders stayed untouched longer than needed. Goods unloaded from the truck were moved into an input area where they would stay for a few days.

The warehouseman would check that the quantities received correspond to the purchase order on a printed version of it and put the paper on a big pile of papers he would only bring to an administrative clerk once in a while, sometimes once a day, sometimes every second day.

So, the production manager would go directly to the input area and check if the goods were there and, based on the goods received, he would decide which production order would be worked on. Note that all this happened outside the system.

The purchasing manager would call the supplier and ask why the goods had not been received on time, as he was not informed about the goods receipt.

Some simple measures that changed the whole production

To solve this we had to set-up a few measures:

  • We introduced bar code scanners for incoming goods. An incoming delivery note was printed and the warehouseman could scan the barcode directly from the printout. The quantity was automatically taken from the purchase order. If the quantity was incorrect, he would not scan the position and make a note on the incoming delivery note what quantity was really delivered
  • The scanner file had to be uploaded in the system twice a day (midday and end of business day) and the paper had to be processed the same day
  • The production department was not allowed to take goods directly from the input area. They had to make a reservation using the system. The reservation was only possible when goods were in stock
  • The incoming goods were not allowed to stay more than one day in the input area. After a few hours, they should be putaway in the warehouse or in production if there was an urgent need in production
  • We did a full physical inventory of the warehouse, the production area, and the input area

These simple measures completely changed the procurement and production processes

  • The stock was accurate and allowed the purchaser to run the MRP and process the procurement proposals properly
  • The goods entry process went from a few days to a few hours
  • The production manager could plan the work using the ERP and would not spend his time searching for raw material
  • A lot of discussions with very low added value, related to location of the goods disappeared and the warehouse manager could concentrate on his core tasks
  • The production interruptions were minimal
  • Customer satisfaction and availability of the goods on promised date went higher

This was a few years ago. In the meantime, the scanner technology has evolved and the new scanners from Zebra are delivered with android, wi-fi and can be online, directly connected to the ERP, so that the stock is immediately updated.

Motorola and mERP Warehouse app

One application that does that is mERP Warehouse from Xpansa. You can scan the purchase order and scan any product from the list, and enter the quantity. So, you will automatically get the remaining quantities in a separate incoming delivery order.

It’s sometimes not so much the ERP that needs to be changed in order to optimize the warehouse. The definition of clear rules and of a viable business process can already do a lot of goods.

Photo by Nick Saltmarsh via Flickr cc by 2.0


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