What are Receiving Rules in a Warehouse Management System?
Part 3 Back To Basic — Receiving Inventories Into The Warehouse
Receiving rules are business rules when warehouses receive inventory from suppliers. For example, whether to accept or reject over receiving of an ordered item. The warehouse management system is to assist warehouse operation to manage the processes. Because garbage in will always result in garbage out, hence receiving inventory into the warehouse is the most critical step in a warehouse operation.
“How difficult can this be? Even my grandmother knows how to receive inventory into her storeroom and retrieve it later”. A comment I often heard when talking to many organisations, especially the sales department. The function of sales is to create enough works for the warehouse and the function of the warehouse is to execute these works flawlessly. These two departments should work closely together, but they often do not. As such there are cases and pitfalls that you should try avoiding, I recommend you read the book ‘Dodge It If You Can’.
A good warehouse management system allows operation administration to set receiving rules, such as items that can be received into the warehouse, quantities that are acceptable and can be received and the acceptable exceptions in these rules. For example, for this particular item, if the supplier supplies more than what has been ordered for no more than 20%, accept the delivery. Another example is that for some suppliers, the delivery must be in full ordered quantity or else the warehouse shall not accept the inventory.
Another important rule is shelf life, inventory may have different shelf life and the warehouse management system must be able to track and manage these inventories. For example, you don’t want to receive inventories about to expire into your warehouse, unless they are goods return.
When the warehouse is handing a few thousand items, human workers are no longer effective and efficient in memorising these rules. Human has a limited and fairly unreliable memory when dealing with too many items, inventories and rules. If you are a third-party logistics (3PL) provider operating a shared-service warehouse with multiple clients, it is vital to have a good warehouse management system ensuring all the receiving rules are followed without fail.
Another example is that some items may require immediate quarantine upon receiving. A decent warehouse management system must have the features enabling you to configure the rules to fit your current and future needs.
Originally published at AC2 Group on December 20, 2020.
