BUS104 Supply Chain Management Warehousing Operations Certification Track

1. BUS104 Supply Chain Management Warehousing Operations Certification Track Learning Block 2 – Receiving Goods at the Distribution Center James Jennings

2. Common Learning Block Description • In this learning block, we will investigate the activities that take place in the Receiving Area of DCs by taking an integrated view toward learning. The integrated view will include discussion of the processes, equipment, and technology used to speed the flow of goods through warehouses as they are handled during receiving, sorting, value-adding services, storage, order selection, and shipping. It is important for warehouse associates to be familiar with warehouse activities and related terminology to contribute effectively as employees and to be able to communicate effectively with customers and with other team members. • The receiving function is essential to warehousing operations because unless product is properly received, it is difficult to handle all other subsequent functions. The receiving function allows warehouse operators to receive product against purchase orders and against ASNs that have been received via EDI. The receiving process can include goods physically received at the warehouse and stored or goods directly delivered at customer sites or cross-docked.

3. The Receiving of Goods • The objective of the receiving function is to assure that vendors: • deliver the correct product to DCs in the correct quantities, • in good condition, • and on schedule. • In the receiving area: • incoming goods are normally checked and unpacked, • and loads are repackaged/organized into a storable format (where required), • entered into inventory, • have markings/labels applied to SKUs, • and are staged for movement to the storage area. • Cross-docking and certain value-added activities could also take place here. • In many DCs, the receiving area is often the least understood and most poorly planned part of the facility. • This poor planning often leads to: • congestion and chaos, which creates a serious “bottleneck” and adversely affects the overall efficiency, cost, and performance of the distribution network.

4. The Receiving of Goods • Activities Carried Out In Receiving • Typical activities carried out in the receiving of goods include the following: • Scheduling delivery vehicles at the receiving dock and yard control • Unloading product from the delivery vehicles • Checking product quality and quantity • Identifying the product and entering it into inventory • Ticketing and packaging the product • Completing JIT and cross-dock activity • As is the case with all warehouse operations, the receiving function will vary greatly from industry to industry. • For example, companies in the chemical and petroleum industry receive inbound supplies in bulk quantities (e.g., rail tanker cars and tanker trucks) rather than in boxes flowing over a conveyor on a receiving dock.

5. The Receiving of Goods • Scheduling of the Delivery Vehicle at the Receiving Dock and Yard Control • Yard control activities include scheduling inbound vehicles for offloading, restraining vehicles, checking seals, and opening of the truck door, and inspecting the trailer or load condition. Yard control and scheduling inbound delivery vehicles determines when delivery trucks are due to be positioned at the DC’s unloading dock. Whenever possible, this dock location minimizes the internal transportation distance between the dock door and the storage location. • Other yard control activities include the following: • Using chock behind the trailer driver side rear wheel or other means of vehicle restraint • Checking the seal and opening the truck door • Inspecting the trailer or load condition for damage or infestation • When trucks arrive at the dock, they generally find one of three types of DC dock configurations: • combined, • scattered, • or separated. • The following sections describe each of these configurations. • In the combination docks arrangement, receiving and shipping activities are performed in one building area, so fewer dock positions are used. • These activities use the same docks, building area, equipment, and employees and, therefore, lead to a more productive use of resources. • For best results, this combination concept requires a truck dock schedule in which inbound product is delivered in the morning and outbound product is loaded in the afternoon. Receiving and shipping docks are on the same wall, so product tends to flow through the facility in a horseshoe pattern.

6. The Receiving of Goods • The disadvantage of using combination docks: • is that it tends to increase in house transportation and requires exact scheduling of inbound and outbound trucks, • and it may also lead to vehicle congestion in the receiving and shipping areas. • With this method, it becomes more difficult to compensate for product delivery problems and business fluctuations. • In the scattered dock arrangement, incoming goods are delivered to a number of points on the perimeter close to the point of use. • This dock arrangement allows the product to flow directly in a straight line from the delivery dock area to the assigned storage area. • Shipping docks are located along the opposite building wall from receiving, allowing product to flow from storage areas into the shipping dock area. • This arrangement is particularly suitable for DCs that operate a cross-docking operation.

7. The Receiving of Goods • Disadvantages of this arrangement include duplication of services and back-up facilities, requirement of increased labor, need for increased management control, difficulty in rearranging the layout during an expansion program, and under-utilization of mechanical handling equipment (i.e., excessive capital investment). • In the separated dock arrangement, receiving and shipping docks are located at opposite ends of the building and utilize separate equipment, employees, and supervision. • This concept reduces in-house transportation requirements and activities. Other advantages include flexibility in scheduling trucks, increased capacity to handle business fluctuations and problems, large volume of goods, and inventory with a large product mix. The disadvantages of separated docks are similar to those discussed for the scattered dock arrangement..

8. The Receiving of Goods • Dock Design Features • Receiving docks normally have the following features to ensure effective and efficient handling of arriving goods: • Seals and shelters to keep the area clean and dry. Seals and shelters are exterior doorframe and jam features that extend outward from the building and permit trucks’ rear, sides, and top to fit flush against this extension and building doorframe and jam. Seals and shelters help to protect goods from bad weather and help to improve dock security. • Dock levelers and vehicle restraints safely connect the trailer to the dock. Dock levelers bridge the gap between the dock edge and vehicles to allow handling equipment access to the goods within that vehicle, while also accommodating differences in height between the dock and the vehicle. • Good lighting throughout the area for trailers being unloaded • Adequate maneuvering space to allow easy access to docks and to manual and automatic handling systems

9. The Receiving of Goods • Unload the Product From the Delivery Vehicle • Unloading is the second of the main receiving activities. • The unloading activity includes the physical movement of the product between the delivery vehicle and the receiving and shipping docks. • Three methods are used to move product: • manual method, • mechanized method, • and automated method. • For an effective operation and good employee productivity, each method should be matched with its product, type, volume, and appropriate equipment for handling material. • Following are descriptions of the unloading methods.

10. The Receiving of Goods • Following are descriptions of the unloading methods. • Manual Unloading Methods • The first unloading concept group consists of manual methods. Employees are required to carry the product, or pull or push a carrier with product, between delivery vehicles and the dock. These various concepts are applied in any type of distribution facility that handles single items, carton, or pallet loads. • Mechanical Unloading Methods • In these methods, gravity, electricity, and fuel-powered vehicles, or conveying surfaces, move cartons or unitized product between the warehouse dock and the delivery truck. These methods may be used in any type of distribution facility. • Automatic Loading Concepts • The final concept group for receiving and shipping consists of automatic unloading and loading methods. Various designs in this group utilize electric-powered conveyor systems, hydraulic platforms, or specially designed trailers to move product between the dock and the trailer. All these automatic devices move product between the truck and the dock area with very little labor and are particularly suited to high volume throughput operations.

11. The Receiving of Goods • Following are descriptions of the unloading methods. • Check Product Quality and Quantity • The third main receiving activity is to verify that vendors’ product quality and quantity are correct and match the purchasing documentation ASN. This activity ensures that product delivered to warehouses is what was ordered, that the quality is acceptable, and that the quantity is correct. • Once a shipment has been accepted, the next step of processing freight is checking in the materials. Receiving checking is carried out by comparing the receiving companies’ purchase order or ASN to the materials that have been unloaded onto the receiving dock to ensure the following: • Quantities received match purchase order or ASN • Products are identical to purchase order • Quality is acceptable according to predetermined standards • Problems and discrepancies are documented and reported to the proper party responsible. • Any missing or damaged cartons in transit become the responsibility of the freight carrier or transport company. • Vendors and manufacturers would be notified if the order is of poor quality, has incorrect quantities, or has missing or wrong products.

12. The Receiving of Goods • Following are descriptions of the unloading methods. • Some firms use a form of quality assurance in which they institute a Total Quality Control program with vendors. This program aims for quality at the source, or “doing it right the first time” at the vendor’s site. This type of program reduces or eliminates the need for receiving quality control practices. • In cases that the product is incorrect or damaged, it will normally be held in a separated, clearly demarcated, holding area to await disposition. This disposition normally takes the form of • Returning the entire shipment to the vendor • Inspecting 100% of the incoming products and separating acceptable quality product from poor quality product. Good quality product is sent to the storage area, and poor quality product is returned to the vendor.

13. The Receiving of Goods • Enter the Product Into Inventory and Product Identification • The next receiving activity is to update the product inventory files. Receiving department employees enter the SKU quantities into inventory and transfer the goods from the receiving department staging area to the storage staging area.5 • In DCs that use barcode scanners, ASNs, inbound unit load license plates, or other means of capturing receipt information, employees may have little interaction with the computer to formalize product entry into inventory. • The action may consist of viewing collected information on the screen and hitting the Enter key to verify it. In DCs that use paper-based transactions (e.g., receiving documents), employees may need a more extensive key entry to input product and quantity data.

14. The Receiving of Goods • Ticket and Package the Product • In certain retail DC operations, a sub-activity of product receiving is the SKU ticketing activity in which a retail price tag is placed onto each SKU. • In this activity, the procedure includes a mechanical printer that prints tickets, which are then glued, clipped to, stitched into, or hooked onto the SKU. • In some industries, a repackaging operation may take place prior to the product being stored. • The purpose of this activity is to convert the product from a bulk form (e.g., products tossed into a large bin without individual packaging or wrapping) to a form that is ready to be placed into storage. • The activities can involve unit load transformation. • For example, parcels might be unpacked into individual cartons, pallet loads containing unstable loads might be stabilized, or it might be necessary to change the height (quantities per pallet) of a pallet to conform to storage or building constraints.

15. The Receiving of Goods • Value-Added Activities6 • Receiving functions also include activities, such as packing products, into customer-specific/marked cartons, possibly in customer-specific quantities. Depending on the type of company, industry, and the nature of the operation, kitting might also take place at this stage. • Kitting is a process in which a group of specific individual items are packed together—in the container the consumer will handle—to create one unique item.

16. The Receiving of Goods • Value-Added Activities6 • Receiving functions also include activities, such as packing products, into customer-specific/marked cartons, possibly in customer-specific quantities. Depending on the type of company, industry, and the nature of the operation, kitting might also take place at this stage. • Kitting is a process in which a group of specific individual items are packed together—in the container the consumer will handle—to create one unique item. • For example, a mail-order company that has fishing flies, reels, and rods delivers to its DC and packs these products into a fisherman’s kit for storage and subsequent picking against orders for these kits. The process of kitting is more fully described in Learning Block 5.

17. The Receiving of Goods • Cross-Dock Activity • Another major activity that is carried out in the receiving area is the cross-dock activity. • This type of operation changes the traditional sequence of activities and product flow in DCs. • In cross-docking, the product is received and then distributed to the customers’ staging shipping area directly, without being placed into storage (see Appendix B). • This flow concept reduces the distribution facility number of product handlings and number of days to flow from vendors to final customers but emphasizes inbound-outbound dock and sorting activities.

18. The Receiving of Goods • Place Product Into Staging Area • This activity involves depositing the product that has been unloaded from the incoming vehicles (e.g., parcel, LTL, truckload, or railcar) into a specific area of the warehouse for pickup by the putaway team.7 • Goods arrive and are stored in DCs in varying types of storage locations and containers, depending on the product characteristics and the amount of product to be transported or stored. These locations and containers have specific industry-related and accepted names, and specialized pieces of equipment (i.e., material handling equipment) are used to handle the various types of containers. The following is a list of some names and characteristics of common storage containers: • Intermodal containers (shipping containers) are used for the efficient transportation of goods. Standards specify the volume and dimensions of containers to facilitate efficient handling. • Pallets are one of the most commonly used means to store and move product in DCs (see Figure 13). Many specialized devices (i.e., material handling equipment) are used to handle pallets (e.g., forklift truck, pallet jack, pallet inverter, and unit load). Pallets may be stored in a number of ways, including single tiers on the floor, stacked on the floor, or stored in pallet racking. • Gaylords are large single boxes usually connected or attached to a pallet. • Cases and cartons are boxes usually containing many items. In DCs, there is generally an accepted distinction made between cartons and cases, but both are boxes. Cartons are typically defined as the inner pack, or subset of product, that is pre-packed and ready to sell within cases. Cases may contain several cartons within it. • Totes are reusable containers used to hold and transport goods.

19. The Receiving of Goods • A Receiving Scenario • Many companies use ASNs to ensure efficient receiving operations. • To begin, the ASN for a particular order arrives at the DC before the order so staging instructions and staffing level plans can be generated before the goods arrive. • DC staff are allocated to handle the incoming shipment, and the optimal routing flow for the incoming goods is determined; if storage is required, the storage location is designated. • Computer-generated information will then alert DC personnel about the quantity of goods that will be arriving, • whether they are to be cross-docked or stored, • and if they will require staging at some intermediate area prior to cross-docking or storage. • The computer also uses information provided by ASNs to schedule and coordinate the use of receiving docks. • Before the incoming carrier arrives at the DC, it may receive information via its on-board computer about which receiving dock to back into.

20. The Receiving of Goods • The Computerized Receiving Function • A worker meets the truck at the receiving dock with an RFT, which is used to check in the goods received. • It has a full keyboard, special function keys, a digital read-out, a small printer, and an attached bar code scanner; it also receives information from, and sends information to, a central computer, which is sometimes called a host computer. RFTs can be hand held or mounted, sometimes on forklifts, and are used to check in the goods received. • If there are computer or communications issues, a computerized warehouse may resort to paper-based tracking of receipts until the computer is online. • In fact, many smaller warehouse operations still work on a paper-based system in which warehouse activities are noted on paper (rather than captured on an RFT) and are manually typed into a computer by a receiving, shipping, or inventory clerk.

21. The Receiving of Goods • RFTs may scan case SCS codes or other identifiers and transmit the data to the computer system to reconcile received goods with purchase orders; • specific products and quantities are identified, and any damage or suspected damage is recorded. • Trailers are then unloaded according to RFT instructions. • RFTs can also generate carrier receipts, and in some companies, RFTs provide detailed instructions to operators. • These on-screen instructions specify the sequence of activities that should take place. • Shipments are received in various types of containers, but the shipment container markings of one kind or another are generally attached to goods that have been unitized.

22. The Receiving of Goods • A unitized load is a consolidation of a number of items into one shipping unit to make handling easier. Loads can be unitized by banding, binding, or wrapping. • The shipment container marking may even be attached to a trailer that has been sealed and secured prior to shipment. • Goods are commonly unitized on pallets, which are typically wooden platforms used for stacking and transporting products as a unit load. • They are commonly four foot squares and constructed to place forklifts’ forks between the platform levels. • RFTs can also print license plates, which are used to direct and track the movement of goods. • License plates are computer-generated and are used to direct and track the movement of packaged goods through DCs. • Information required for license plates is sent to the RFT, which prints a bar code label (i.e., license plate). This label is attached to the goods in the receiving area. .

23. The Receiving of Goods • Key Metrics Used in Receiving • Receiving activity is essential to warehousing operations. Unless product is properly received, it will be difficult to handle all other subsequent functions. The receiving function allows warehouse operators to receive product against a purchase order and against an ASN that has been received via EDI. The receiving process could include goods received at the warehouse and stored, delivered at customer sites, or cross-docked. • The relevant key performance indicators (KPIs) for receiving function should include the following: 1. Cost: Cost of receiving per receiving line 2. Productivity: Volume received per man hour measured in terms of pallets, cases, etc. 3. Utilization: Receiving dock door utilization percentage 4. Quality: Accurate receipts percentage 5. Cycle Time: Time taken to process a receipt