Receiving Area

Receiving new stock in a retail store needs to be a disciplined process if the business is not to lose money from lost, damaged or stolen goods.

Too often, retailers focus on the front of hours, the retail shop floor, to the detriment of the back of hours, back office functions which can make or break a retail business.

Many retail businesses do not even have a receiving area where goods coming into the business are placed and processed. This is a huge mistake.

I was involved with one retail business recently where more than two thousand dollars worth of stock was uncovered when we were reorganizing the back room. This stock, which have been thought to have been lost, was found hidden in a wall cavity behind a desk.

The cost to the business was not only the cost of the stock which was unsaleable when found but also the opportunity cost. This was a new line which the head office had ordered to trial. The stock loss was covered up. This was able to be done because of a poor goods inward process at the store level.

Here are some simple rules for organizing the receiving area of a retail store which should help avoid lost stock, mistakes and theft:

Require that all goods arriving in-store must be signed for.
Lay out goods inwards rules and responsibilities. Post these in a public place in your business but away from customers. Train all new employees in the process.
The process needs to explain the steps involved in getting new stock from its arrival in the business to the shop floor and how long this should take.
Set aside an area, no matter how small, where all goods are placed when they arrive into the business. Include in this an area for each step of the inwards process: receiving, checking, pricing, storage and damaged goods.
Establish a rule that the goods are not allowed to leave this area without permission of a manager.
Follow a clockwise approach as this is often found to work best. The goods come is and are placed to the left of a back room or a storage apace and move right to the next section and so on. If the business as such space of course.
Management should check in the stock arrivals process to ensure that processes are being followed and appropriate checks and balances are working.
Try and get your suppliers to provide you with invoices electronically before the goods arrive. This will save time and paperwork. It will also provide an external data feed and eliminate an opportunity for employee fraud should they receive less stock into the business than you actually receive.
Once you have established your goods inwards process and area, get all employees together and explain the new processes to them. Lay down your business rules and explain why you are going through this process.

Get the goods inward process right and you can expect to receive shrinkage, speed up the time it takes to get stock to the shop floor, reduce mistakes and make better quality business decisions.