Mastering Inventory Replenishment: A Step-by-Step Guide

August 01, 2023

Inventory replenishment is a common practice to ensure that the right quantity of products is available with the seller or retailer on the picking shelves at the right time. Poor in-store ordering and replenishing practices—retailers ordering too late or too little, making wrong demand forecasts, or otherwise mismanaging inventory—contributed to 72% of stock-outs, according to a study by Harvard Business Review.

This alarming percentage shows that inventory replenishment must be done systematically and on time. In summary, inventory replenishment that is done correctly helps to prevent overstocking and stock-outs, which can be very costly in supply chain management. Inventory replenishment covers more than just ready-to-sell inventory and raw materials stock used to make finished products. A businessman can run their business smoothly by restocking the goods and services.

Table Of Contents

Why is Inventory Replenishment Important?
Methods of Inventory Replenishment
Best practices for Inventory replenishment
Benefits of improving your Inventory replenishment process
Conclusion

Why is Inventory Replenishment Important?

Businesses need a strong inventory replenishment strategy because it can help teams avoid costly supply chain issues like overstock or out-of-stock.
As previously stated, out-of-stock products can not only lead to sales loss but can also have a significant impact on brand trust and customer loyalty.
They can also put your shelf security at risk because rival brands may start taking over any vacant space.
Overstocking, on the other hand, can be just as bad for your company. CPG companies are aware of the fact that excess inventory can hinder new product rollouts, brand redesigns, or, in the case of food and beverage brands, push products beyond their “sell by” date, making them unfit for purchase.
Overstocking can also confuse the supply chain. If any backstock information is not communicated before an order for replenishment is placed, both brands and retailers may lose money to handle the overstock.

Methods of Inventory Replenishment

1. Reorder Point Method

A replenishment/reorder point is the unit quantity on hand that causes the purchase of a specific amount of inventory replenishment.
That is why reorder point serves as a signal for the storekeeper to restock the goods that are nearing completion in the store.
It is similar to the fuel reserve indicator on a motorcar or bike. This allows you to refill your vehicle before it runs out of fuel while driving.
Once the reorder point is reached, the retailer places a new order for the items that have been filled so that he can successfully fulfil his subsequent orders without stopping.
The result is that there will be no interruption in production and fulfilment activities while simultaneously reducing the total inventory on hand.
However, one important thing to keep in mind is that each product in the store may have a different reorder point because the reorder point is based on the time that your supplier takes to deliver the items to you.

How to calculate reorder point?

Lead time, average daily usage rate, product selling rate, and vendor safety stock are required to calculate reorder level. Lead time is the time that the supplier takes to ship the goods after the vendor places a purchase order. The product’s average daily sold units are the average amount of goods sold daily.

The formula for calculating reorder point is (Average daily sold units x Lead time).

2. Periodic Stock Replenishment Method

The periodic inventory replenishment method takes inventory levels of products over a specified period.
A replenishment order can be placed or not depending on specific inventory needs, but only at the review point.
Restocking inventory in a warehouse is ideal with this method. Warehouse’s larger storage capacity allows it to store goods that can last for three to six months.
As a result, regular checks and reviews are sufficient for the items that are stored in the warehouse, and the inventory levels of these items are examined to determine whether or not they need to be restocked.
There is no need to reorder the stock if the stock levels are sufficient.

3. Top off Method

One of the most popular inventory replenishment techniques is top-off, also known as lean time replenishment.
When the picking operations are less active, the stock is replenished by this method. This makes it easier to review the stock and replenish it as per a predetermined threshold. Because it is the most efficient way to restock fast-moving SKUs, this is the most convenient option for retailers.
When the stock count is done once in a while during less active operations hours, it can be replenished on a daily, alternate days, or weekly basis as needed.
When demand is low, this method improves efficiency because items are always filled in the forward pick locations.

4. On-Demand Inventory Replenishment Method

On-Demand inventory replenishment is another common method used by retailers. The seller or retailer restocks high-demand items. Because other things are slow, they might not be given priority.
So that you can stock them in sufficient quantity, it requires careful preplanning and forecasting the demand for the products shortly.
Because there is a high demand for seasonal items only during a specific time of the year, this method is ideal for seasonal products.

Best practices for Inventory replenishment

Regular stock counting

One of the most common things that all sellers, vendors, and manufacturers do is stocktaking. Stocktaking regularly prevents overstocking, stock theft, and stock shrinkage. Additionally, it will allow you to determine the total number of each product(s) you have on hand, which will facilitate accurate inventory tracking.

Demand forecasting

Current and past sales data is useful because it gives you an idea of which products are selling well and which are selling poorly. This sales knowledge helps you restock items according to their needs.

Reliable Suppliers

Buy products from a reliable supplier because it is important for your business to have the stock of goods supplied to you in the quantity you need and at the right time. However, when you choose a supplier, you should also choose one who delivers goods of high quality at the right time in the right amount.

Benefits of improving your Inventory replenishment process

Optimise sales

Order the right amount of goods to be delivered to the right place at the right time. The retail replenishment system ensures that all products have the best inventory levels, which allows you to sell more profitably.

Reduced mark-downs

Optimised stock levels enable you to meet customer demand while minimizing stockouts. Increased sell-through of full-priced stock and a lower markdown rate keep margins safe and profits rise.

Make the stock turn possible

Confidently meet customer demands without overstocking or understocking.

Conclusion

Inventory replenishment is essential for any business to run smoothly and profitably. Businesses can avoid costly supply chain issues like stock-outs and overstock by using efficient inventory replenishment strategies. This minimizes wastage and reduces sales loss and brand trust.

The reorder point method makes it easier for items to be restocked at the right time, which minimizes delays in the production and fulfilment process. Warehouse storage uses the periodic stock replenishment method because it allows regular checks and reviews to determine how much restocking is needed. For fast-moving SKUs, the top-off method ensures that items are always available in forward-pick locations. For seasonal items that are highly demanded during certain times, on-demand inventory replenishment is the best option.

Companies can meet customer needs, avoid supply chain issues, and prosper in today’s competitive market by having a well-organized and active inventory replenishment method. Thus, mastering inventory replenishment requires time and effort. In the changing business world, it can really make a big difference for businesses that want to grow and stay strong.

Supercharge your fulfilment with WareIQ now, contact our team.

Footwear Brands: How to Manage Returns Effectively With Wareiq’s Returns QC Solution

In the footwear industry, post-purchase experience plays a pivotal role in determining a brand's success and customer loyalty. As e-commerce continues to grow, so does the volume of returns, presenting a dual challenge of maintaining high customer satisfaction while managing logistical efficiencies. For footwear brands, managing returns effectively is not just about handling unwanted or unsatisfactory products; it involves a comprehensive strategy that encompasses customer service, logistics, quality control, and financial implications. Effective returns management can significantly impact customer retention and profitability. A smooth, transparent returns process enhances customer trust and promotes a positive brand image. However, ineffective returns strategies can lead to increased operational costs, inventory mismanagement, and damaged customer relationships. This article will explore the intricacies of returns management for footwear brands, emphasising the need for robust systems and innovative solutions like WareIQ's Returns QC solution, which optimises this complex process through technology-driven efficiency and quality control. By addressing these challenges head-on, footwear brands can transform returns management from a cost centre into a strategic advantage, ultimately driving greater customer loyalty and sustainable growth. Challenges Faced by Footwear Brands in Managing Returns Footwear brands face several distinct challenges when managing returns, each adding layers of complexity to their operations: 1. High Return Rates Footwear often experiences higher return rates compared to other products, primarily due to sizing issues, colour mismatches, or style dissatisfaction. This high volume of returns puts a strain on logistical operations and customer service. 2. Quality and Condition Assessments Returns in the footwear industry require rigorous inspection to ensure the products are in resellable condition. This involves checking for wear and tear, verifying packaging integrity, and ensuring that all parts and accessories are returned. Such detailed assessments require time and resources, complicating the logistics workflow. 3. Logistical Complexities Managing the logistics of returned items includes organising reverse shipping, handling, and restocking. Each step must be coordinated efficiently to minimise costs and time delays, which can be challenging, especially when dealing with high volumes of returns. 4. Financial Impact The costs associated with processing returns are significant. They include shipping costs, handling fees, and the potential loss of revenue from products that cannot be resold. Furthermore, frequent returns can lead to increased scrutiny from payment processors and banks, potentially resulting in higher fees or penalties for the brand. 5. Customer Expectations Today’s consumers expect a seamless return process. They demand easy-to-understand and accessible return policies, quick turnaround times, and flexible return options. Meeting these expectations is crucial for customer satisfaction and loyalty but can be difficult to manage alongside the need to control costs and maintain operational efficiency. 6. Sustainability Concerns With a growing focus on environmental impact, footwear brands must consider the sustainability of their returns process. This includes minimising waste associated with packaging and damaged goods and finding ways to recycle or refurbish products wherever possible. Addressing these challenges requires a thoughtful approach that balances customer satisfaction, operational efficiency, and financial health. Strategies for managing these issues effectively are critical for maintaining competitiveness in the footwear market. Strategies for Effective Returns Management To address the challenges associated with returns and create a streamlined process, footwear brands can employ several strategic approaches: 1. Clear and Concise Return Policies Establish transparent and easily understandable return policies that clearly state the terms and conditions of returns. This reduces confusion and helps manage customer expectations, potentially reducing the volume of unnecessary returns. 2. Invest in Technology Utilise advanced logistics and inventory management systems to automate and optimise the returns process. Technologies such as RFID (Radio Frequency Identification) and barcode scanning can help track products efficiently, reduce errors, and speed up the processing time. 3. Enhanced Quality Control Implement rigorous quality control measures at the point of return to ensure products are in the appropriate condition for resale. This helps maintain product integrity and reduces the financial burden of unsellable returns. 4. Customer Communication and Feedback Develop a robust system for communication and feedback throughout the returns process. Keep customers informed with updates via emails or SMS about the status of their return. Also, feedback should be gathered to understand why products are being returned and used to reduce future returns. 5. Flexible Return Options To enhance customer convenience, offer multiple return options, such as in-store returns, locker drop-offs, or postal returns. Providing a variety of options can improve the customer experience and potentially reduce the cost of handling returns. 6. Staff Training and Development Ensure that all personnel involved in the returns process are well-trained and understand the importance of efficient and customer-friendly service. This includes training in handling procedures, customer service skills, and the use of any relevant technology. 7. Analyse Data to Identify Trends Analyse return data regularly to identify patterns or trends in product returns. This can help identify specific issues with certain products or sizes, which can then be addressed through design improvements or better product descriptions. 8. Sustainable Practices Adopt environmentally friendly practices in the returns process by minimising packaging use, encouraging customers to consolidate returns, and finding ways to refurbish or recycle unsellable returns. Implementing these strategies improves the efficiency and cost-effectiveness of the returns process and enhances customer satisfaction and loyalty, creating a competitive advantage in the dynamic footwear market and repeat business. WareIQ's Returns QC Solution for Footwear Brands To address the complexities of returns management in the footwear industry, WareIQ offers a specialised Returns QC (Quality Control) solution that is tailored to meet the specific needs of footwear brands. This innovative solution incorporates several key features designed to streamline the returns process, ensure product quality, and enhance customer satisfaction: 1. Automated Returns Processing WareIQ’s solution automates many aspects of the returns process, from initiation to final disposition. This automation includes the generation of return labels, tracking of return shipments, and updates to inventory levels. Automation helps reduce human error and speeds up the processing time, making the returns process more efficient. 2. Integrated Quality Control Central to WareIQ's offering is its robust quality control system that inspects returned items to ensure they meet the brand’s standards for resale. This system uses advanced scanning and imaging technologies to assess the condition of the footwear, ensuring that only items in appropriate condition are restocked. 3. Real-Time Data and Analytics WareIQ provides real-time analytics that allows brands to monitor and analyse return rates, reasons for returns, and customer feedback. This data is invaluable for making informed decisions about product improvements, inventory management, and customer service strategies. 4. Customisation Options Recognising that each footwear brand has unique challenges and requirements, WareIQ’s Returns QC solution offers customisable options to address specific logistical and operational needs. This flexibility ensures that brands can optimise the solution to better suit their business models and customer base. 5. Seamless Integration The solution seamlessly integrates with existing logistics and ERP (Enterprise Resource Planning) systems, ensuring that information flows smoothly between returns processing and other business functions. This integration helps maintain data integrity and provides a holistic view of inventory and operations. 6. Enhanced Customer Experience By streamlining the returns process and ensuring that customers receive timely refunds or exchanges, WareIQ's solution helps improve the overall customer experience. Transparent communication throughout the returns process keeps customers informed and helps build trust and loyalty. By leveraging WareIQ's Returns QC solution, footwear brands can not only handle returns more effectively but also turn the challenge of high return rates into an opportunity for enhancing customer satisfaction and operational efficiency. Case Studies: Footwear Brands Leveraging WareIQ's Returns QC Solution Several footwear brands have adopted WareIQ's Returns QC solution to address their challenges with returns management. These case studies highlight the effectiveness of the solution in transforming their returns process, enhancing customer satisfaction, and improving operational efficiency: 1. Brand A A prominent sports footwear brand faced high return rates primarily due to sizing issues and customer expectations not being met. After integrating WareIQ’s Returns QC solution, Brand A reported a 25% reduction in return rates within the first six months. The automated quality checks helped maintain the integrity of returned items, ensuring that nearly 95% of returns were restocked and resold, thereby significantly reducing waste and improving profitability. 2. Brand B A luxury footwear brand struggled with managing the returns of high-value items, which required meticulous quality control to maintain brand standards. The introduction of WareIQ’s customised quality control system allowed Brand B to enhance its product reassessment process, increasing customer satisfaction by ensuring that customers received products in pristine condition. This also elevated the brand's reputation for quality and customer service. 3. Brand C Faced with logistical challenges with reverse shipping and restocking, Brand D leveraged WareIQ’s integration capabilities to synchronise their ERP systems with the Returns QC solution. This enabled real-time data flow and analytics, which improved inventory management and reduced return processing times by 40%. 4. Brand D This rapidly growing online footwear retailer used WareIQ’s analytics tools to gain insights into the reasons behind returns. The data collected led to changes in product descriptions and sizing information on their e-commerce platform, which reduced return rates by 20% and enhanced customer trust and retention. Conclusion Effective returns management is pivotal for the success and sustainability of footwear brands in today's market. As demonstrated by the integration of WareIQ's Returns QC solution across various brands, this approach can significantly improve operational efficiencies, reduce costs, and enhance customer satisfaction. The solution's ability to automate processing, ensure rigorous quality control, and provide valuable data analytics transforms a traditionally cumbersome and cost-heavy process into a strategic asset. By embracing advanced technology solutions like WareIQ's Returns QC, footwear brands can effectively address the myriad challenges associated with high return rates. This not only supports a positive customer experience—encouraging loyalty and repeat purchases—but also aligns with broader business objectives such as sustainability and profitability. As the footwear market continues to evolve, the brands that will thrive are those that leverage innovative technologies to enhance their returns management processes, turning potential setbacks into opportunities for growth and customer engagement. Frequently Asked Questions What are the typical return rates for footwear brands online?Online footwear brands often experience return rates between 20% and 30%, primarily due to sizing issues and customer expectations not being met. This rate can vary widely depending on the type of footwear, the brand's target demographic, and the effectiveness of its sizing guides and product descriptions.How does WareIQ's Returns QC solution enhance customer satisfaction?WareIQ's Returns QC solution enhances customer satisfaction by streamlining the returns process, ensuring faster processing times, and maintaining communication with the customer throughout the process. This transparency and efficiency directly improve the customer's experience and perception of the brand.Can WareIQ's solution integrate with existing logistics systems?Yes, WareIQ's Returns QC solution is designed to integrate seamlessly with existing logistics and inventory management systems, providing a cohesive and efficient workflow. This integration helps maintain data accuracy, reduces the risk of errors, and enhances overall operational efficiency.What are the cost benefits of implementing WareIQ's Returns QC solution for a footwear brand?Implementing WareIQ's solution can significantly reduce the costs associated with handling and processing returns by automating many of the labour-intensive steps involved. Additionally, the improved efficiency can reduce the turnaround time for getting products back into inventory and available for sale, minimising the financial impact of returns.How does real-time analytics from WareIQ help manage footwear returns?Real-time analytics provide footwear brands with insights into return patterns and reasons, aiding in better stock management and preventive measures for high-return products. This data allows brands to make informed decisions about product adjustments, marketing strategies, and customer service improvements.What measures does WareIQ's solution include to prevent fraudulent returns?WareIQ incorporates verification checks and quality control assessments to identify and reduce fraudulent returns, ensuring that only legitimate returns are processed and restocked. This helps protect revenue and maintains the integrity of the brand’s inventory.

May 14, 2024

Import Export Code Registration : Your Gateway to Global Trade

All businesses in India with cross-border transactions must get identification from the Indian government for regulatory compliance and legal processes. It ensures that they abide by respective regulations and laws related to foreign trade. That is what Import Export Code Registration /licence is all about. It is a 10-digit unique identity number issued by the Director General of Foreign Trade (DGFT) India to authorise a business for cross-border imports and exports. Without an IEC code, customs clearance is impossible, and foreign trade is prohibited. Therefore, it is crucial for new businesses aspiring to global markets to register for import-export codes in India. This blog post provides relevant details. Eligibility for Import Export Code Registration The IEC certificate in full form is the Import Export Code Certificate. Any business that is proprietorship, partnership, limited liability partnership, trust, limited company, hindu society or undivided families can apply for DGFT IEC code. Businesses or individuals involved in importing or exporting goods as part of their business activities must obtain a DGFT IEC license number. In the case of services, if service providers have clients abroad and they're availing the benefits of Foreign Trade Policy, getting an IEC code is mandatory. IEC Code Exemption An IEC code is not required for imports and exports related to personal purposes. Cross-border transactions performed by Indian government departments, ministries and selected charitable institutions do not need an IEC licence. Some traders with GST registration do not need IEC. Importing gifts and samples within prescribed limits does not call for an IEC code. If the import is part of the service provision, then an import-export certificate is not necessary, e.g., for software imports. Importing from SEZ (Special Economic Zones) to DTA (Domestic Tariff Areas) within a country is exempt from IEC registration. Documents Required for IEC Code Registration PAN card of the business holding. Address proof of the applicant/business holding. Business registration/certificate number. Bank account of business entity with a Cancelled cheque. Passport-size photograph of the applicant. Identify proof of the applicant (Aadhaar/Voter ID Card/Passport). Import Export Code Registration Procedure DGFT import export code registration online can be done by submitting necessary documents. To apply for IEC code, follow the below steps. Step 1: Visit the government portal of DGFT– dgft.gov.in. Step 2: Go to “Register for your IEC” section and click on “Apply for IEC” Step 3: Select the registration tab for a fresh application. Enter the necessary details to complete registration. Already registered users can login directly. Input OTPs received by email and phone number to validate. After successful verification, a temporary password will be sent. Use that for the first time DGFT login and change it afterwards. The IEC code registration form becomes available. Start filling it out. It usually asks about the type of business (proprietor/partner/director/Karta/managing trustee), bank information, and other details. Submit the required documents as mentioned above. Fill the “ANF2A” (Aayat Niryat Form 2A) form. Pay applicable DGFT India fees. After the application form is successfully completed, it will be sent to the DGFT for verification of documents and details. Based on the verification outcome, the application for DGFT IEC code registration may be approved or rejected. In case of approval, an IEC code is issued. For online applications, the DGFT IEC code will be issued through e-IEC. An email will be sent about its availability on the registered DGFT account. Timeline The DGFT India, in association with the income tax department, completes real-time verification of the IEC application. Upon approval, an IEC code certificate is typically issued within a day. Import Export Code Registration Fees in India The fees for Import Export Code Registration in India are very nominal. The IEC code registration is complete only after the payment of fees. Applicants can make the payment through Credit/Debit cards, net banking, and UPI. Import Export Code Registration India Fees TypeFeeIEC Code Registration Fees₹500Professional Fees₹999Filing at DGFTNilAayaat Niryaat Form 2ANilTotal₹1499IEC Registration India Fees DGFT IEC Code Renewal The import-export certificate is forever valid. However, annual updates are necessary to keep the code activated. Every year, businesses must consider their IEC code renewal between April and June. At other times, additional fees are applicable. Since 2021, the Indian government has made the renewal mandatory after import-export code registration with DGFT. Otherwise, such businesses will be classified as “Deactivated” for foreign trade. They must follow the required procedures to “reactivate.” While the procedure remains mostly the same for DGFT IEC renewal, the previous IEC Code licence number may be required. Benefits of IEC Code License The IEC license is mandatory to perform imports and exports through customs. The Indian government offers various benefits to businesses with the IEC code, such as tax benefits, incentive schemes, etc. Businesses can enter into global markets to showcase and sell their products. Increased trust from global customers, suppliers, banks, etc., due to certification. The unique IEC code allows tracking of all cross-border transactions, eliminating the room for fraud. Businesses with IEC registration automatically become compliant with various import-export regulations, including regular updates. Because of access to various opportunities, businesses with IEC will also offer a good customer experience. The Use of IEC Code in Exports The import-export certificate must be produced along with the following documents for gaining clearance for cross-border exports. Bill of Lading: A document from the shipping company to track and transfer ownership of goods. Commercial Invoice: Lists exported goods, quantity, price, and payment terms, issued by the exporter. Packing List: Info on shipment contents and quantities, issued by the exporter. Customs Declaration: Submitted to customs, declares imported/exported goods, their value, and purpose. Related Read : What is Goods Received Note (GRN) Conclusion Every business holding in India intending to perform foreign trade must get an IEC code from the DGFT. It is not only mandatory for regulatory compliance and customs clearance, but establishes them as a trustworthy business in the international markets and gains a global customer base. As discussed above, imports and exports for personal purposes do not need IEC. However, when the business purpose is involved, the import-export certificate is mandatory, irrespective of the scale of the business. Frequently Asked Questions Can I cancel DGFT IEC code for my business?IEC holders can cancel their Import-Export Code by filing an online surrender request on the DGFT website, submitting documents, and completing the application to revoke future export/import transactions.How to download an IEC certificate?To download the IEC certificate PDF, log in to the DGFT website. Navigate to Services > IEC > Manage IEC, verify details, and click 'Print IEC'.Is IEC license enough to perform exports from India?While the Import-Export Code (IEC) is a crucial document for exporting from India, it is not the only requirement. Depending on the product category, shipping mode, destination country, and other factors, exporters must obtain additional mandatory documents and licenses.Is the IEC certificate valid throughout India?The IEC (Import-Export Code) is a unique identification number applicable across India for your import-export business.

May 13, 2024

Demystifying Goods Received Note (GRN): A Comprehensive Guide

Organisation is the pillar of effective inventory management in any organisation. For larger organisations, the risk of error is high without a systematic process for every transaction. That is where a GRN plays a role. A GRN, in its full form, is a Goods Received Note, which is document-proof for goods sent by suppliers as mentioned in the purchase order. The GRN (Goods Received Note) contains product details such as type, cost, quantity, and quality checks. While it serves as an acknowledgement between suppliers and receivers, it is a future reference in case of conflicts and dispute resolution. Let’s learn about the GRN herein. What is the GRN Receipt A GRN receipt is a crucial document that confirms the receipt of goods between suppliers and vendors. GRN stands for Goods Received Note. It is an important record for inventory management. Vendors issue GRN receipts to suppliers after the reception of goods, confirming the quantity, nature, and condition of the goods. If the goods are damaged, receivers can inform the suppliers at this stage. In that case, a GRN receipt will be issued after verification and adjustments. The GRN document applies only to tangible goods, not to intangible services. As simple as it may sound, it involves multiple stakeholders, inter-departmental approvals, deadlines, and other intense manual tasks. Structure of GRN Format Header: Includes details of company name, a unique GRN number, and the date of receipt. Supplier Info: Name, address and contact details of the supplier. Delivery Details: The date and time of delivery, the mode of transportation, and any special instructions followed for delivery. List of items: A detailed list of all items along with product descriptions, quantity, unit price, item codes, and total value of the products. Quality Checking Section: Some GRN formats include information about the condition of the goods received, good or damaged. Signatory: Signatures of authorised personnel from both suppliers and receivers to acknowledge and verify GRN details. Source: stabnet.org GRN Issuance Process The receiving department or warehouse receives the goods from the supplier or vendor. They inspect the received goods and check them against the purchase order or shipping documents. It is to ensure they are accurate in quantity, product specs, and condition. Any discrepancies, such as shortages, damaged goods, or incorrect items, are recorded for further action. A GRN is prepared manually or by a software system. It contains details. For example, the order number, supplier name, item descriptions, and received quantities. It also includes the date of receipt and any noted discrepancies. Authorised personnel review and approve the GRN. They are usually from the receiving department or inventory team. Receivers give copies of the approved GRN to relevant departments. These include purchasing, accounts payable, and the supplier. The inventory records reflect the received goods and their quantities by updating them based on the information in the GRN. The GRN serves as a reference document for reconciling the supplier's invoice. Benefits of GRN Receipt Delivery Acknowledgement: GRN primarily acknowledges the successful receipt of goods by vendors. It closes the transaction. Future Reference: A GRN is a crucial document for future reference for both vendors and suppliers. It serves as proof for any dispute resolution, warranty and returns claims in future. Quality Check: Vendors will perform quality checks on the goods received and inform the suppliers if there are any issues. Inventory Management: GRN enables businesses to monitor stock levels and effectively plan restocking. Additionally, inventory managers can cross-check received products against ordered items, preventing unauthorised goods from entering the inventory. Accounting: The GRN document enables accountants to validate inventory balances and verify purchase entries in the stock ledger without having to request procurement details from the warehouse or managers. Cost Tracking: By recording the quantity and value of goods received, GRNs assist in tracking the cost of inventory, which is useful for accounting and financial reporting purposes. Legal Compliance: In certain industries or jurisdictions, issuing GRNs may be a legal or regulatory requirement. So, they ensure compliance with accounting standards, tax laws, or other regulations. On-time Payments: GRNs facilitate the timely processing of vendor payments by providing a record of goods received. Once the goods have been verified and accepted, vendors can authorise payment. Supplier Performance Evaluation: GRNs are a record of vendor performance, including delivery times, quality of goods received, and any discrepancies. They can be used to evaluate and manage supplier-vendor relationships. Who Prepares Goods Received Note The Goods Received Note (GRN) is typically prepared by the receiving department or the stores department of a company when they receive goods or materials from a supplier or vendor. It is an internal document that serves as proof of receipt and acts as a cross-reference for the subsequent processing of the supplier's invoice. Challenges with GRN Receipts Delayed GRN issuance due to time taken for quality checks, especially in larger organisations where turnaround time can take a week. Lack of communication regarding quality issues leads to bottlenecks in issuing GRNs in larger organisations. Potential discrepancies and errors among the ordering, procurement, and supplier teams halt the GRN and invoice generation process. The manual and tedious process of managing GRNs, including issue resolution and communication across teams, results in a high administrative workload. GRN systems do not integrate with other software like inventory management, accounting, or ERP systems. Tedious manual data entry increases the risk of errors. Companies with a high volume of transactions need help to store and retrieve GRN receipts. This is true for companies that maintain records for extended periods. Methods of Automating GRN Process The automation of the entire GRN issuance process needs to be improved. However, with the help of available technologies, it is possible to expedite many intermediate processes. It ultimately speeds the GRN issuance while reducing the risk of manual errors. Barcode Scanners: Using barcode scanners or radio-frequency identification (RFID) technology to automate verifying and recording the received goods against the purchase order. Optical character recognition (OCR): OCR technology can automate the extraction of data from shipping documents or invoices, reducing manual data entry and errors. Electronic data interchange (EDI): Establishing an EDI system with suppliers can enable the automatic exchange of purchase orders, shipping notifications, and GRN information. Cloud-Solutions: Adopting cloud-based GRN solutions can provide centralised access, real-time updates, and improved collaboration among stakeholders, regardless of their location. Streamlining Workflow: Implementing workflow automation tools can streamline the review, approval, and distribution processes for GRNs, reducing delays and ensuring timely communication among departments. Conclusion In essence, GRNs serve as crucial documentation for receiving goods, acknowledging delivery, and facilitating inventory management and accounting processes. However, we learn that issuing GRNs can be challenging, especially for larger organisations. It results in delayed responses, communication gaps, recording errors, and a need for more automation or integration with other systems. Addressing these challenges through standardised procedures, training, automation and technology adoption can streamline the GRN process. Related read: Purchase Order Fulfillment Strategies for Blinkit FAQs About Goods Received Note What is GRN full form in SAP?In SAP, the full form of GRN is a Goods Receipt Note. It is a document that records the receipt of goods from vendors or suppliers.What is GRN in accounting?GRN accounting refers to the Goods Received Note.What is the GRN example?A Goods Received Note (GRN) is a document that confirms the receipt of goods from a supplier. It records the items delivered, allowing the buyer to verify if the received goods match the order.What is the difference between GRN and Purchase order (PO)?A Purchase Order (PO) is a document issued by the buyer specifying the products, quantities, and prices for the seller to provide. A Goods Received Note (GRN) confirms the receipt of goods and is typically compared against the PO before payment is made to the seller.

May 10, 2024