How To Turbocharge Your Retail Receiving Process

Do you know the average time (in hours) for incoming merchandise to travel from the delivery truck to your sales floor shelves? You should know that number and monitor it closely.

Over almost four decades of retail consulting work, I have observed the detailed inner-workings of an untold number of retail store receiving areas. While many conceptual receiving similarities exist between various retailers, the manner in which the receiving process is employed is typically unique by nameplate. Retailers have struggled with poor receiving productivity for decades, but they really do not need to. The process (even in unique stores) is basically just a series of sub-tasks that need to be performed in an organized manner. It is the “organized manner” component that trips up so many receiving teams.

The receiving process is composed of tasks that need to be choreographed based upon the merchandise that is being processed. Incoming items that are “floor ready” need only be moved to the sales floor and placed on the appropriate fixture as rapidly as possible. Incoming items that require processing (hanging, folding, tissue removal, cleaning, etc.) before being placed on the sales floor need to be addressed independently and their flow pattern will vary from the direct to sales floor goods.

When reviewing a store receiving process, retail management needs to be aware of the key variables that impact the speed of merchandise flow. A few of the more important variables include the following:

Pre-delivery awareness is important for store receiving team preparation. Your contract with third party shippers, or even your own DC, should require firm delivery time slots and communication to the stores before delivery occurs. The store staff should be scheduled to perform operational tasks when they are necessary, not when they happen to occur.

Unloading, movement and processing equipment necessary for rapid receipt and handing needs to be available and properly utilized.

Receiving area layout and intended flow patterns by type of merchandise need to be well thought out and ready to accommodate each delivery. Equipment stored out of the way for space reasons needs to be re-positioned and staged for use when the delivery is about to occur. The work area needs to be cleaned completely to permit the receiving process to flow without impediment. Most backroom receiving areas are magnets for stalled or damaged merchandise that needs to be addressed and removed. A sample flow diagram follows. This flow may need to be modified to meet your store requirements.

Assumed store receipt should be employed to minimize check-in time required. Some retailers permit the computer system to automatically transfer DC owned inventory to the store stock ledger when a truck delivery is made. Another inventory transfer release option that is often employed is to have the receiving team log the delivery into the computer system once the delivery has been completed. The DC should be responsible for any “trouble vendor” check-in counts required, not the stores.

Task line-balancing techniques should be utilized to balance the processing of goods and subsequent movement to the sales floor, departmental stock areas, or storage fixtures . The steps in the receiving process need to be properly sequenced and slower tasks need to be assigned more staff to allow the processing speed to be balanced from task to task. By way of conceptual example here, if there are four steps in a receiving process (A,B,C and D) and A, B and C each require 1 minute of time per item and step D requires 2 minutes per item to perform, then you should staff step D with 2 people, so that the line speed will be balanced.

Training for both associates and the supervisory staff is critical. Most people need assistance to productively organize a series of task steps and few are aware of the concept of line-balancing. In my example above, if step D is staffed with only one associate, the overall productivity of the series of steps would only equal the speed of the slowest step. Balancing various levels of productivity needs to be mastered and applied to the receiving process.

Performance metrics and performance feedback need to be in place to permit your operational staff to understand the concept of performance metrics, understand what their current productivity level really is and what could be done to improve it. Few operational staff in retail have workable performance metrics and even fewer get feedback about how they are performing. I recommend that performance feedback occur at the team level, so as not to single out individuals who are underperforming. Given time, a team focused on performance will find ways to self-correct. Do you know what your current receiving process productivity is and what it should be?

Proper staffing techniques based upon performance metrics are also critical to making sure your merchandise moves as desired. Staffing the correct number of associates is best accomplished when you are aware of your team processing rate. For example, if you expect a delivery with 100 cartons and your processing rate is 10 cartons per hour (for the entire team) then you know you will need to staff 10 operational hours. Also be aware of when you schedule staff. Staffing operational associates in the morning when you expect a late day truck delivery only sets the store up for slower merchandise movement.

Senior operational management awareness and oversight is also important to ensure that middle management employs the components mentioned. Management needs to display a willingness to think outside-the-box and continuously strive for higher levels of performance.

Why pursue the recommendations above? Having observed and worked with many different retail clients to improve their receiving / stocking processes, I have learned that left unmanaged, most operational team performance (productivity) will degrade by approximately 30%. Limited operational supervision will help to improve (reduce) that number, but rarely are the supervisory teams effective at achieving a high-level of productivity without guidance. The lower the operational productivity you experience, the slower your merchandise moves to the sales floor shelf and the greater your operating expense.