Reader Question


I am currently working on a project to streamline a receiving dock that receives about 350 loose UPS boxes per day.

Each box has to be opened, detrashed and counted before it can be received. Once qty is verified the parts are received in our WMS and then moved to an outgoing rack where it is inducted into our warehouse. These part are then used to assemble internal product.. We catch about 2 boxes per day that have the wrong quantity sent from our suppliers. We deal with about 400 suppliers and there are no repeat offenders.

I think we should go to a well thought-out sampling plan to verify quantity, so that we can flow product through the dock more efficiently. But managers disagree as they do not want to be responsible for shrinkage or assembly floor shortages due to us not counting every single box. I should add that we count about 4500 parts per day as each box we receive has a different Qty. of parts.

What have you done in the past as far as counting the quantity in each box? What sort of sampling plan have you found works?

Andy Moore

Category: Receiving Operations


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Expert Panelist Response: Fred Kimball, Principal, Distribution Design

The receiving operation does not want to count each piece because the error frequency is so low (2 boxes with errors out of 350 = .6%). The assembly operation does not want to be charged with any vendor shortage as part of the assembly process. Each department wants to be as good as it can be in optimizing its day. This is understandable, but who is considering what is best for the company in performing the combined set of processes, receiving through assembly?

The process that optimizes the combined operations is one where there is no detailed counting of the parts at receiving and no penalty to assembly for shortage due to vendor errors. This is because the frequency is so low and the occurrence among vendors is so random. (However, I’ll bet there are repeat offenders among vendors or among the same part(s) and maybe a longer, deeper view of the data will show offending vendors than can be corrected, assessed a charge back, or eliminated.)

Errors from vendors are both shortages and overages. What is missing is an accounting solution. I would not want to slow down receiving for the sake of catching a couple errors a day, and I would not want to slow down assembly to have the detailed counts done there. The accounting solution recognizes there are a few errors that may not surface until assembly, and over time, the shortages and overages will net a small difference or net to zero. The best approach is to ignore vendor shortages, i. e. do not penalize assembly for vendor errors. Or, there should be an accounting allowance for assembly to charge a small percentage to vendor shortage.

There are several other considerations that may change the best approach.

  • If the missing parts are diamonds (high value), I would do the detailed count at receiving because the company will have to pay the vendor for any shortages. The principle here is the cost of checking for errors should not exceed the value of finding the error.
  • If the parts are low value, I would not even bother with an accounting adjustment. Tell the accountants to “get over it”.
  • In any case, the company needs a metric to track vendor errors (shortages and overages) daily / weekly to identify changes in the error rate. An increasing rate needs attention to the specifics (what vendors, what parts), and a decreasing rate needs less attention.
  •  Receiving should check in detail any box that shows damage or that it might have been opened along the way.


Hope this helps.

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There are a huge variety of bench, standalone, and in-line Automatic Check Weighing equipment and systems available that eliminates the need for manual counting and greatly speeds up the receiving process. They also provide reports so that a vendor record can be maintained – as Fred Kimball suggested.

This equipment is recommended for applications just like the one Andy is describing.

Cliff Holste

SCDigest Materials Handling Editor

I like the answers of both Fred and Cliff, but am going to offer some counterpoints

While .6% may seem like a small number, it is certainly well above "six sigma" levels, and I am not sure Iwould be willing to live with that, though I agree with Fred it really depends on the value of the items being received. Also, wonder if the errors are random over/underages, or whether it is usually shortages.

The challenge with Cliff's answer might be that you cannot get accurate product weights from the suppliers, or they use random carton sizes, either of which would potentially thwart the "check weight" approach.

You may be able to work with suppliers on both issues, however, and/or weigh the products yourself if that's the only recourse. Not sure how many total SKUs you are dealing with, but if you are opening the boxes now to get a weight as part of the receiving process, adding a weigh step for a short while would be fairly painless. If you can capture that and have vendors always use the same size cartons, this certainly could work.

I don't think a sampling plan will really help you much. Auditing processes like that are usually to ensure that the overall process/quality seems to be working - it would only really tell you whether that .6% error rate was growing or shrinking over time. It this scenario, it would not be really useful for finding the errors.

I agree with Fred that I suspect there are some patterns that may not be apparent. Could be, for example, that 250 vendors are almost always accurate. Cutting the inspection down from 400 suppliers to 150, just for example, might be a reasonable compromise. I don't know your receipt profiles, but for example do you receive some "full cases" and some "mixed cases," or cases with less than full case quantity. If so, the mixed or less than full cases are much more likely to have errors. So, you let the full cases go straight through, inspect the mixed or partial cases. There may be other variants on this theme.

The last idea I have concerns whether you can capture when a carton is "consumed" in manufacturing. If yes, can you then compare that to the amount your manufacturing systems thinks has been consumed? Flagging those exceptions will at least allow you to react the "shortages" (overages are less of an issue) from an operational perspective, though who takes the hit for the inventory I don't know.

Seems to me from all of the thoughts thus far you ought to be able to craft a solution that works for all. For example, maybe some suppliers/types of shipments are exempt from inspection, and the remaining are check weighed for errors, rather than opened and counted, except for high value items which are opened. Something like that.

Dan Gilmore

Supply Chain Digest