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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

After unloading, receivers must verify the receipt by referencing the freight bill and the original purchase order. An important check is matching the receipt date with the scheduled receipt date to prevent early delivery. In case of external damage or incorrect materials, receivers normally will reject the receipt and reload it back on the carrier for return to the supplier.

Unpacking and Damage Inspection

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

  • The items received against the supplier's packing list and the original PO
  • The quantity is checked in the same fashion
  • 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

Often, newly received products are urgently needed for internal production or to fill backorders. By checking each receipt against a "hot list" of backorders, personnel can speed the flow of materials through the receiving process.

Prepare Receiving Report

A formal report is made of the receipt including completeness, quality, delivery, and other performance issues. The resulting documentation is provided to accounting, which uses the information when verifying payables invoicing, inventory control for materials disposition, purchasing for supplier performance evaluation, and quality management for receipt inspection.

Delivery of Materials

Often receiving is responsible for transporting materials to the proper stores locations for put away or, for non-stock items, directly to the requestor.

Once receipt has been completed, the original order must be reviewed for possible close-out. Purchasing and accounting must carefully review any unreceived lines, costs, and quality issues and make judgments as to PO line and overall order status. Effective receiving procedures will significantly reduce the acceptance of unordered inventories, early deliveries, inaccurate quantities, poor quality, and costly misidentification of materials.

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