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Purchase Order Flow – Receiving and Order Close-Out

The overall responsibilities of the receiving function are to receive, identify, perform general inspection, and confirm that the products received from the supplier are what the planner ordered.


The first step in receiving is the unloading of the order from the carrier. Efficient unloading requires developing balanced delivery schedules by working with carriers to maximize dock capacities and minimizing employee resource requirements.

Shipment Verification

Once the goods have been unloaded, the recipients must cross-check the receipt with the freight bill and the initial purchase order. It is crucial to compare the receipt date with the scheduled receipt date to avoid premature delivery. If there is any external damage or incorrect materials, the recipients usually decline the receipt and reload it onto the carrier for sending back to the supplier.

Unpacking and Damage Inspection

Once the goods have been accepted, the receiver is responsible for performing three verifications:

1. The items received against the supplier’s packing list and the original PO

2. The quantity is checked in the same fashion

3. A general inspection is performed to determine if any internal damage was sustained during delivery. Some receipts may have to be routed to the inspection department for formal review and acceptance

Unitize Materials

Received materials should be unitized (pallets, containers, and so on) to reduce material handling.

Hot List Review

Frequently, newly acquired items are required promptly for internal manufacturing or to fulfill outstanding orders. By cross-referencing every receipt with a “priority list” of pending orders, staff can expedite the movement of materials during the receiving process.

Prepare Receiving Report

After receiving items, a report is created that assesses their completeness, quality, delivery, and overall performance. This report is then given to the accounting team, who use the information to verify payables invoicing, control inventory for materials disposition, evaluate supplier performance for purchasing, and inspect receipts for quality management purposes.

Delivery of Materials

The responsibility of transporting materials to their designated store locations or directly to the requester falls on the receiver. After the materials are received, the original order must be thoroughly reviewed for possible closure. Purchasing and accounting departments must carefully examine any unreceived lines, costs, and quality issues and determine the PO line and overall order status. Implementing effective receiving procedures can greatly reduce issues such as unordered inventories, early deliveries, inaccurate quantities, poor quality, and costly misidentification of materials.

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