Receiving Workflow Provides Opportunities for Improved Accuracies and Efficiencies

Receiving is the process of confirming that you received what you ordered from the vendor or supplier. Does the product received match the purchase order? The main receiving priority is to validate that you have received the exact order and move the incoming goods – whether pallets, cartons, totes, boxes, or other – as fast as possible from the incoming trucks to the storage, staging, or shipping areas in your DC.

Every stop, every move, and every use of a temporary staging area requires space and time. The more you touch or handle product in any way, the more opportunity for product damage, difficulty in locating stock, and errors – and by default increased labor, inventory, and other costs. Dock-to-stock cycle time has been an area of greater focus with the growth of ecommerce and the need to eliminate the receiving bottleneck and get doors turned, product received, and put away into billable status to fulfill outbound orders – sometimes for the same day.

It can be argued that the receiving process is the most important process in the DC. All downstream processing depends on the accuracies and efficiencies achieved in the receiving process. Receiving quantity and/or product errors will ultimately affect the ability to ship the right product and the right quantity to customers, resulting in decreased customer satisfaction levels and possible sales loss to competitors.

There are many different types of receiving and one or many could be in use by the client. These can include:

• Fluid unload to conveyor where there may be an opportunity for Print and Apply.
• Less than Truckload (LTL), which may or may not involve the need for breakdown of the pallets into correct quantities and configuration (TI x HI). (Can be pallet- or floor-loaded.)
• Straight loads of one SKU usually palletized, but sometimes floor-loaded in the instances of bulk items such as paper.
• Loads requiring specialized Material Handling Equipment (MHE) like slip sheet machines, etc., which are not as common anymore.

There are also several different methods of receiving that can include:

• Paper-based receiving, which is typically the least efficient and productive and the most error-prone.
• RF receiving using either vendor-supplied labels (UCC 128), information-specific labels, or generic labels.
• ASN receiving usually deployed in very high-volume situations or in situations where you have several different SKU types in single cartons such as apparel receiving that pre-matches the actual ship information from the vendor to the expected PO in the system and makes the adjustments systemically so that the expected quantity now matches the shipped quantity. Full ASN receiving is a process where a one-button push receives all the items on the PO in the quantities said shipped by the vendor. This is usually only done with very trusted vendors who have a history of delivering exactly what they say they shipped.

When a typical DC receives, counts, and inspects thousands of items from hundreds of vendors whose own pick/pack/ship practices are all different, receiving can be one of the most complicated DC processes. Any errors in this phase will have a ripple effect that can impact all other areas in the DC. In addition to the physical process impacts, data from receiving determines when/how vendors are paid (directly impacting cash flow), potential rework costs, and incorrect inventory exposure. Picking and outbound process efficiencies start with receiving. Receiving best practice means moving items to their next location with as few touches – as little labor – as possible.

Good receiving also starts with good labeling, both with vendor labels and those used to map to internal inventory systems and locations. Depending on the warehouse management system (WMS) receiving module, typical pallet labels (generally applied at the receiving station) would likely include:

• Shipper/supplier information (company name, vendor number)
• PO number, receipt date, lot codes, date codes
• Pallet and/or case-level quantity
• Product (SKU) number and description
• Pallet, case, each unit level ID
• TI x HI information
• Track and traceability information

In many receiving operations, portable printers can enhance pallet labeling productivity and accuracy by eliminating travel and ensuring the right label is applied to the goods received in real-time. An effective receiving system also includes a well-labeled facility. All storage and staging areas such as aisles, slots, rack bays, shelves, put-to-store floor locations, through to the shipping dock doors, are likely to be labeled with large, easy-to-read (both human-readable and barcoded) location labels. Voice-picking processes also typically use randomly assigned two-digit human-readable location ID check-digit labels. And larger barcode “license plate” labels that can be scanned from 30–50 feet are recommended to identify high-bay inventory locations.

Multiple industry studies confirm that paperless data acquisition processes based on scanning, voice, and/or RFID are the most accurate and error-free methods of receiving and subsequent handling of goods. To maximize productivity and accuracy of the entire operation, top DCs always begin with the labeling process at receiving. While it may sound simplistic, the rewards of reduced receiving errors are very high. WERC studies show that receiving is an area where benchmarking and performance measurement are particularly important.

On the Path to Continuous Improvement

Supply chain leaders who are responsible for DCs continually seek to balance best practices with identifying the most impactful KPIs/metrics to drive productivity, cost optimization, and service excellence.

The real value of metrics comes from analyzing the metrics output and driving a continuous improvement mindset throughout each workflow in the DC/warehouse.

We can point to almost any DC KPI and learn the best-in-class metrics that provide us a benchmark to measure against. The path to best in class is a process of improvement in which you can identify workflow pain points and develop a path that incorporates a combination of investment in technology and continuous improvement.

As a tool to help review and identify opportunities for improvement, DCs conduct what we at Honeywell refer to as a DC Walkthrough for each workflow, which should be done every two to three years. This is a review/audit based on best practices that can yield clear and measurable actions to use and consider when planning for workflow improvement and investment. We’ll take a closer look later in the article.

According to the WERC study “DC Measures 2018 Trends and Challenges1,” the following are a few of the KPIs that DCs use in part to measure the Receiving workflow:

1. Dock-to-Stock Cycle Time, in Hours
   • Definition. The dock-to-stock cycle time equals the time (typically measured in hours) required to put-away goods. The cycle time begins when goods arrive from the supplier and ends when those goods are put-away in the warehouse and recorded into the inventory management system.
   • Calculation. For a given time period: sum of the cycle time in hours for all supplier receipts / Total number of supplier receipts.
   • Quintile performance metrics.
     • Best-in-class. < 2 hours
     • Median. 6.2
     • Typical. >= 4 and < 8.096
     • Disadvantage. >= 8.096 and < 24
2. Lines Received and Put-Away per Hour
   • Definition. Measures the productivity of receiving operations in lines processed and put-away per-person hour.
   • Calculation. Total lines received and put-away / Total person hours worked in the receiving operation.
   • Quintile performance metrics.
     • Best-in-class. >= 60 per Hour
     • Median. 22
     • Typical. >= 20 and < 27
     • Disadvantage. >= 8.096 and < 24
3. Inventory Count Accuracy by Location
   • Definition. Indicates that 10 units of part number XYZ are in slot B0029. The inventory count accuracy indicates how frequently one can go to that location and find that the physical count matches the system’s.
   • Calculation. The sum of the number of locations containing an error / The total number of locations counted.
   • Quintile performance metrics.
     • Best-in-class. >= 99.88%
     • Median. 98.40%
     • Typical. >= 97% and < 99%
     • Disadvantage. >= 90% and < 97%

Improving the Receiving Workflow with a DC Walkthrough

A DC Walkthrough is an engaging assessment that includes discussions, observations, and interviews among workers, supervisors, and management personnel with the objective to document current business and operational processes and look at ways technology and process changes can be applied to make improvements. The DC Walkthrough can be an informal or formal review/audit conducted by the company or external third parties.

At Honeywell we have the opportunity to conduct DC Walkthroughs throughout the world for every conceivable type and size of DC. The goal of our assessment is to validate logistical/operational processes relative to industry best practices focused on time savings, increased worker productivity, and improved accuracy. We focus on the identification of opportunities to both improve stand-alone general processes, as well as improve processes with new technology.

When we review the Receiving workflow, we ask questions like:

1. Do you have advance notice of incoming shipments? How far in advance?
2. What types of transportation/carriers are used for inbound?
3. Are receipts posted against purchase orders?
4. Can there be multiple receipts against a purchase order?
5. Can multiple trailers be received for a single purchase order?
6. What is the configuration of the inbound product? (pallets, mixed pallets, floor load, etc.)
7. Is the product broken down and/or sorted for counting and receiving? Describe the process.
8. What paperwork accompanies inbound product? How is it recorded?
9. Is a workstation used to reference information in the system for the receipt?
10. What documents are used on the warehouse floor during the receiving process? How are the documents used?
11. What is the important information on the paperwork?
12. What information from the receipts/purchase order is required by the host system?
13. How and when are receipts recorded in the system?
14. What information is available on the inbound product? What is currently being tracked on each? What information is barcoded?

• Pallets?
• Cases?
• Eaches?
• Other?

15. Describe the receiving process steps. (Paper? RF? RFID? Voice?)
16. Are receipts of items allowed that were not on the purchase order?
17. Are overs/unders on shipments accepted?
18. How is damage handled on receipt?
19. What kind of labeling is performed? Are all products labeled the same?
20. What happens with the receipt paperwork when it is completed?
21. Do certain items require a different receiving process?
22. Are some receipts a higher priority?
23. What types of special situations exist?
24. What other types of information is tracked at time of receipt?
25. Container/asset tracking?
26. Vendor compliance/inspection/quality control?
27. Catchweight/code date/lot #/serial #/temperature?
28. Track and traceability?
29. How is product staged/prepared for put-away?
30. Is product ready for put-away following receipt?

Receiving Walkthrough Observations and Recommendations Example

Conducting a DC Walkthrough is done with “fresh eyes.” Fresh eyes is defined as looking at the workflow with the intent of learning and understanding the current state of operations without bias or preconceived conclusions, and then applying industry knowledge and best practices to recommend ways to improve upon the current performance.

The following is an example of a DC Walkthrough Honeywell did for a large-sized DC in North America for the Receiving workflow, which includes observations with associated recommendations.

DC Walkthrough Observations

1. Inbound mostly on 1st shift
   1. Some 2nd shift but tapers in evening
2. Currently no ASN
3. Very manual process
4. Not using standard LPN now
   1. Vendor compliance issues
5. Reconfigure pallets a lot
   1. Too much rework and finger printing of product
6. Currently add slim LPN to receipt label to tie product to Oracle
7. Currently required to hold hand over quantity barcode while scanning part number barcode
8. New receiving process in development for O/S
   1. Currently planning stops shipment/receipt
9. Receipts building 1 staged considerable distance from dock
   1. No scan to stage lane observed
10. Build multi-product pallets for put-away
    1. Some to overstock
    2. Some to pick location
    3. Scans each product (yellow label)
    4. Reads location from mobile computer
       1. Writes location with marker on box – typically pick location
          1. No label produced
11. Mexico operation
    1. Paper order traveler with labels
    2. Being phased out
12. Receiving staffing high early in year
    1. Chinese New Year, tariffs, supplier issues
    2. Will move staff to outbound for peak season
13. Most fast movers (Finished Goods) arrive already boxed and labeled
    1. Some exceptions

DC Walkthrough Best Practices and Recommendations

It can be argued that the receiving process is the most important process in the warehouse. All downstream processing depends on the accuracies and efficiencies achieved in the receiving process. Receiving quantity and/or product errors will ultimately affect the integrity of the inventory and possibly impact shipments causing lost sales.

Paper-based receiving is typically the least efficient and productive and the most error-prone. This includes receiving directly off the Bill of Lading (BOL) supplied by the shipper. Any handwritten information on labels or hand-entering of data into computers is also prone to error. RF receiving using either vendor-supplied labels, information-specific labels, or generic labels is much more productive and accurate.

The DC is using a combination of processes that include scanning and manual entry. We recommend that standardizing the process will provide efficiencies moving forward. We also recommend using mobile computers that provide 1D and 2D imaging. Utilizing mobile computers with imagers to scan product and label information as well as capture additional data is more productive (~25%) and accurate (~50%) than paper/manual-based methods. It help ensure quality control, vendor compliance, and quantity received information is captured in real-time. It can also update the BOH in real-time, thus reducing any lag in dock-to-stock cycle time. We recommend that receivers scan the PO information directly into the system and the WMS should support this process. Any barcodes on BOLs that correspond to the PO info can be scanned as well. We have seen clients in the past request barcoded BOLs from vendors and experience high levels of compliance. The mobile computers also provide the ability to do real-time lookups of PO information as well.

The company is currently adding a second slim label to the product as the WMS is currently not able to marry the receipt label from supplier to PO. Oracle should be able to do this as other Tier 1 WMS systems contain this functionality. We suggest a post-implementation audit of the system be done by Oracle WMS resources to determine functionality contained in the system version and compare that with functionality being used by BPI to see where gaps occur.

It was also observed that the receiver had to cover one barcode while scanning another to avoid capturing both. With the imager in the Honeywell mobile computer, the receiver should be able to image the entire area (even with multiple barcodes) and parse that information into the corresponding fields required.

The receiving dock area is very tight on space, so we also recommend receiving and labeling the pallets/cases as they are unloaded from the truck vs. waiting until the entire truck is unloaded and staged on the dock or in another stage area. We realize some product requires additional processing and may need staged, but for product that can be received and processed immediately, we recommend the above. Checking and labeling as unloading occurs keeps the dock moving quicker and put-away personnel can move pallets in concert with the receiving. This reduces dock-to-stock cycle time and turns the doors much faster, enabling more trucks to be received. This also allows the receiver the opportunity to receive more than one load/door at once, which will additionally help turn the dock and doors quicker.

To accomplish this, we also recommend pairing the mobile computers with mobile printers to apply labels as each product is received right at the point of process (for product arriving without usable LPNs). The scanned product-level LPN at receiving will track the product from receipt to storage in the WMS. Using mobile printers at the point of process is also more productive than walking back and forth to a fixed printer.

For the product that needs staged and processed further, we recommend scanning into those stage areas and having them identified within the WMS. This will keep visibility of the product in real-time in the system. As the mixed pallets are created, the cases should be labeled vs. using handwritten information. Once finished, processing a scan of all the labels should be performed, thus allowing the WMS to create a put-away path based upon locations the product is destined for. A scan when product is put away into the specified location should also occur. Please check during the suggested WMS audit for this functionality.

Recommended hardware and software for these processes includes:

• Receiving
  • CN80 series mobile computer
  • RP4 mobile printer with associated media

These recommendations support both 1D and 2D scanning.

All recommendations are Android™ capable.

Technology Improvements in the Receiving Workflow

According to the 2018 WERC study¹, technology within the supply chain is becoming increasingly important. Many companies are beginning to focus on digital transformation by focusing more on mobile technologies, cloud-based services, and big data practices.

The study also points out that a majority of distribution centers use no other technology beyond a warehouse management system (WMS) and mobile devices with RF/barcode scanners. In terms of adoption plans, over 90% of warehouse managers expect to be using mobile technologies within five years (which is just over 50% today). Eighty-six percent expect to be using big data and real-time analytics within five years, which is a 60% increase over the percentage of people using the technology today.

Honeywell brings a wide set of solutions together that can influence positive outcomes in the Receiving workflow throughout the DC. They include the following:

• Mobile Computers with 1D and 2D Imaging.
  Utilizing mobile computers with imagers to scan product and label information as well as capture additional data is more productive (~25%) and accurate (~50%) than paper/manual-based methods. It help ensure quality control, vendor compliance, and quantity-received information is captured in real-time.
• Wearable Solutions. 
  A growing number of companies have turned to hands-free computing solutions to streamline operations and improve productivity. The Honeywell 8680i wearable mini mobile provides a hands-free solution that offers increases in productivity and improved ergonomics over handheld devices.
• Barcode Scanning. 
  Superior durability and reliability, with water- and dust-proof housings and rubberized to reduce damage from falls. Choose from laser, linear image, and area image industrial scanners for fast and accurate scanning, the first time and every time.
• Vehicle-Mounted Computer Solutions. 
  Our vehicle-mounted computer solutions turn forklift- and vehicle-based workflows into information technology platforms. Roughly 25% of the average DC’s labor is spent on receiving and put-away tasks. Equipping your forklifts with technologies – such as computers, barcode scanners, printers, radio-frequency identification (RFID), voice, lights, and software – can reduce material handling costs, help optimize order fulfillment rates, and help increase inventory accuracy with real-time tracking.
• Fixed and Mobile Printing and Media. 
  From light-duty to ultra-rugged models – stationary and portable – to printer software, media, service, and parts, Honeywell offers an extensive range of solutions for any environment or print application.
  • Industrial Label Printers. For commercial light-volume jobs to rugged, round-the-clock printing, built-in “smarts” means greater efficiency and lower cost: error-proof labeling, easy programmability, advanced networking connectivity and security, RFID, and liner-less technology.
  • Desktop Label Printers. The clear choice for a wide variety of light-duty label, ticket, and tag printing applications: quiet and compact, highly intuitive and flexible, and a range of configurations designed to match your needs.
  • Mobile Label Printers. From retail floor labels to field service receipts – designed to withstand punishing conditions where dirt, moisture, temperature extremes, and drops are common: fast, rugged, and ready to move, and allow a full day of printing without recharging.
  • Printer Media Supplies. For a broad range of barcode printing applications, even in some of the toughest environments. Includes barcode labels and tags, receipt paper and wristbands, and thermal ribbons and RFID labels.
• RFID. 
  Ideal for applications such as inventory cycle counts, omnichannel order fulfillment, receiving new product, and pick lists – lightweight yet rugged for tough DC environments.
• Material Handling Solutions from Honeywell Intelligrated. 
  We see many medium-size DCs exploring and adding varying degrees of material handling solutions to augment and/or replace manual portions of their DC operations with elements of the Honeywell Intelligrated offering such as:
  • Labor Management Software (LMS).
    Honeywell Intelligrated’s Labor Management software allows you to effectively manage your labor and staffing needs, helping you to maximize labor productivity and minimize labor costs. Actionable insights allow you to accurately evaluate worker performance. Patented algorithms help forecast when workers may be at risk for leaving, giving you the ability to take proactive measures. Our LMS provides an effective way to manage labor productivity while improving training, process compliance, and efficiency.
  • Sortation and Conveyor Systems. 
    Sortation and conveyor systems are the critical conduits for transporting, directing, and routing product flows through busy DC environments. While conveyors are essential for moving product throughout a facility, sortation systems separate products for induction into individual lanes typically associated with an outbound destination. With the rise of ecommerce, sortation and conveyor systems have evolved from simply transporting cases for store replenishment to handling a variety of individual items and packaging types. Honeywell Intelligrated’s award-winning solutions cover the full spectrum of throughput requirements – up to 20,000 items per hour.
  • Palletizing and Depalletizing. 
    Keep your end-of-line packaging, distribution, and fulfillment operations moving at industry-leading speeds – more than 200 cases per minute or more – with Honeywell Intelligrated’s palletizers and depalletizers. Whether you’re a manufacturer or an omnichannel retailer, you’ll get the flexibility and dependability to stay at peak efficiency. Our engineers can install individual units, or set up complete systems fully integrated with your existing conveyor and other material-handling equipment.
  • Warehouse Execution Systems.
    Honeywell Intelligrated’s Momentum software helps improve efficiencies, automate manual processes, and fully help optimize fulfillment operations. This unified platform reduces unsupportable, one-off customizations and allows you to select only the functions you need to meet your unique operational requirements.
  • Robotics. 
    Robotics enable high-performance material handling and fulfillment capabilities throughout your operations. Intelligrated’s robotic unloader can be a valuable resource in receiving floor loaded trailers. Advanced machine learning enables robotic unloaders to unload trucks, trailers, and shipping containers in less than half the time while handling products with greater care. We have more than 25 years of experience developing and implementing robotic solutions for dynamic, unstructured environments such as distribution centers. Backed by extensive knowledge of DC workflows, we offer warehouse integration expertise, innovative technologies, and a strong controls foundation to incorporate the benefits of robotics into your operation. From packet picking and robotic singulation to unloading and depalletizing, we have a broad portfolio of patented robotic innovations and strive to continually engineer new solutions.

Achieve Better Outcomes with Honeywell

At Honeywell, we have extensive experience in successfully solving complex problems for a variety of ecommerce and omnichannel businesses. We’re committed to solving your DC accuracy challenges through relentless innovation and a desire to deliver best-fit solutions. We provide access to the actionable insights and information you need to transform your business.

Our expert assessment teams will partner with you to understand your unique business requirements and identify where opportunities exist to optimize your workflows and increase efficiencies within today’s competitive business climate.

Take your DC to the next level. Contact us today. 

¹ DC Measures 2018 Trends and Challenges, WERC