Good shipping and receiving procedures are essential for the success of a business which buys materials and ships finished goods. A business can lose money quickly if its procedures for shipping and receiving are not dedicated to total accuracy and accountability for every inbound and outbound item. The question many businesses ask and many more should ask, is how do we do that? There are steps that every business can take.
The first step is to record a bar code for every outbound shipment. The bar code should contain information about the purchase order issued by the buyer including the PO number, date it was received, requested shipping date, amount of pieces or other quantity measurement data, and the shipping method. The price of the shipment should also be included in the bar code. When the bar code is read at the shipping dock, the information is transmitted electronically to the invoice department. Based on this data, an invoice can be prepared and sent to the customer on the day the after shipment is expected to arrive. Ideally, the invoice can be transmitted electronically. If a bar code system is not available or practical, then the same information should be entered manually.
This process creates accountability for the following:
1. Proper accounting for the materials used to fill the customer’s order
2. Accountability for shipping orders on time
3. Updating the accounting system to reflect new accounts receivable.
4. Updating the inventory system5. The bar code data can be matched against the shipper’s invoice for accuracy.
The second step is entering the inbound shipments into the inventory system. Every shipment received should have bar code data which the receiving department can transmit to:1. The accounts payable department 2. The inventory control system 3. The sales department or the production department
The third step requires the shipping and receiving department to match the data on the inbound shipment’s bar code to the company’s purchase order. The purpose of this step is to determine whether the company has received everything it ordered according to the Purchase Order on file which the shipping and receiving department should be able to access. However, the packing slip should also be checked against the shipment received. If the packing slip reflects that more material is in the shipment than was ordered, then the invoice will be incorrect. If the packing slip reflects that materials was packed, but this material is not in the shipment, then the invoice will be reflect a greater cost than is justified. Also, material will be missing.
These employees should make sure that the shipment is in perfect condition, and if it is not, then the employees must have direction about how to handle the shipment. The shipping and receiving department is the first line of defense against poor quality material getting into the company’s inventory. The department employees can save the company money by controlling the quality of the shipments received.
The shipping and receiving procedures can save a company time, extra expense, haggling over quantities at a later date and better invoice preparation and invoice payment.