Receiving Inventory: Process and How to Optimize (2024)

The receiving inventory process details how you receive goods from suppliers and move them to your stockroom. Here’s how to optimize it.

Inventory management is a major pain point for retail and ecommerce brands. 

If your inventory receiving process is inconsistent, there’s a risk of inaccurate stock quantities and wasting cash replenishing inventory you already had. Both are costly—and preventable—mistakes. 

This guide outlines how to build an inventory receiving process, with bonus tips on getting new stock on the shelf as quickly as possible.

What is receiving inventory?

Receiving inventory is the process of receiving goods ordered from suppliers and confirming their quantities and conditions. It helps prevent discrepancies between actual and recorded inventory by ensuring the accuracy of stock.

From accepting the shipment from a supplier to organizing it in a stockroom, a well-defined process helps store managers, inventory specialists, and other staff keep track of their store’s sellable inventory. 

A well-defined process for receiving inventory helps keep your stock room clutter-free and your inventory quantities accurate. That way, if a shopper asks you to check for a product, you’ll know exactly how much you have in stock and where to find it. 

The inventory receiving process

1. Count inventory
2. Check for accuracy
3. Label and place inventory in your stockroom

Now, let’s take a look at the three steps to receive inventory.

1. Count inventory

The first step is to count your existing inventory. Whether you’re doing cycle counts or relying on inventory management software, physically counting inventory gives you a good understanding of which products to reorder. 

If you’re running low on popular items, for example, submit a purchase order (PO) to your supplier. Pay the invoice, agree on a delivery date, and wait to receive the shipment from your supplier.

📦 INVENTORY TIP: Use the Stocky app to create and send a purchase order to vendors and suppliers. Once a purchase order is created, you can track its status and expected delivery date from Shopify POS.

2. Check for accuracy

When a shipment arrives, compare the packing slip with the shipment to your PO to make sure the right inventory and quantity was delivered. 

So as soon as the shipment arrives in your receiving area, check it for accuracy. Pay close attention to whether the following elements match your PO:

• Description of goods
• Product codes 
• Quantities per SKU 

If you spot an error, get in touch with the supplier to inform them of the mistake. Whether it’s missing quantities, you received the incorrect products, or products are damaged, most suppliers will work with you to correct the error. 

📦 INVENTORY TIP: Once a PO arrives at your store, sync it to your inventory in Shopify using the Stocky app. If an item is missing or damaged, you can mark the PO as partially received and contact your supplier to ensure the missing inventory is shipped.

3. Label and place inventory in your stockroom

Once you’ve ensured you received the correct amount and type of inventory, the final stage of the inventory receiving process is to put them away. 

Move your products from the receiving area to where you store inventory. For most merchants, that’s a stockroom (or backstore) on shelves and storage units. Ensure your stockroom is organized and that you’re placing items in the correct spot. This will make it easier for store associates to find products for customers. 

Tips for receiving inventory

• Clean and organize the receiving area
• Use technology to track inventory
• Hire or train inventory specialists
• Test and iterate

The receiving inventory process might look simple, but there’s a lot that can go wrong. Follow these tips to receive inventory smoothly and keep products moving. 

Clean and organize the receiving area

The receiving area, as we said, is the place where retail employees receive, check, and approve incoming shipments. Make it easy for them to do so by keeping the area clean and organized. 

While you’re doing this, evaluate whether your receiving area is in the right location. Is it close to the door or unloading bay? Is there enough room for pallet trucks or forklifts to maneuver around the area? Both of these things streamline the process. 

Use technology to track inventory

“Getting the correct tools and integrations to track inventory in real time is one of the best things you can do for your tracking inventory,” says Daniel Hedegaard, head of press at Cool Parcel. “The last thing you want is for errors and mistakes to cause issues further down your supply chain.

“There’s a variety of warehouse management software and hardware to make ordering, receiving, and managing inventory easier. They’ll save you time, minimize human errors, and make spotting and correcting errors much easier.”

Take advantage of technology such as:

• Bar code scanners
• RFID tags
• Inventory management software 

More often than not, your point of sale (POS) system will connect to bar code scanners and have inventory management software as well. 

Shopify POS, for instance, comes with built-in inventory management capabilities. You can track product sales in real time as they're sold online or in-store and get purchase order suggestions based on historical sales data and seasonality. 

💡 PRO TIP: Shopify POS comes with tools to help you control and manage your inventory across multiple store locations, your online store, and warehouse. Forecast demand, set low stock alerts, create purchase orders, improve putaway accuracy, know which items are selling or sitting on shelves, count inventory, and more.

Hire or train inventory specialists

The inventory receiving process you’ve put into place will only work if your entire team sticks to it. Otherwise, errors may happen, such as incorrectly counting a PO to ensure it reflects what you bought before syncing the products with your inventory management system. 

Left unchecked, those errors can lead to stockouts, overstocking, and inaccurate inventory levels in your POS system. 

Give all retail and warehouse management staff a crash course on how to follow the receiving process, including:

• A list of criteria inventory must meet before being signed off 
• Clear signage on where new inventory is to be stored
• Guidance on how to keep the area clean and tidy

💡 PRO TIP: Want to control which staff can count, receive, and adjust inventory quantities? Set roles permissions to set boundaries on what staff can and can’t do when logged in to your POS system, like accessing its inventory management tools.

Test and iterate

The first iteration of your receiving inventory system might not be the best for your business, but you have to start somewhere. 

As you go, take note of what’s working and what isn’t. Keep refining your inventory receiving process until it’s in a place where it takes as little time as possible, errors are kept to a minimum, and you receive stock before quantities reach zero. 

For example, if you find yourself constantly facing stockouts, consider setting reorder points. With Shopify, for instance, you can set reorder points to get low stock notifications. This ensures you have enough lead time to replenish a product’s inventory before quantities reach zero. 

Challenges with the inventory receiving process

• Time consuming
• Missing or damaged products
• Inaccurate inventory data

Receiving inventory is not without its own unique challenges. Let's look at each of these challenges and how you can overcome them.

Time consuming

From unloading goods to storing new stock, the entire inventory receiving process can be lengthy—especially if you’re receiving several shipments per week. 

If that’s the case, decrease the impact it has by either hiring inventory specialists or scheduling trusted staff specifically to receive and organize inventory. This ensures that sales associates can focus on serving customers, inventory is always stocked, and your inventory shipments are received, approved, and organized without disrupting store operations. 

Missing or damaged products

Stockouts happen when you don’t have enough inventory to meet demand. It’s a problem shared by most retailers amidst ongoing disruption to supply chains.

Unfortunately, inventory that makes its way into your receiving area may have been damaged in transit, or be missing entirely. A proper warehouse receiving process should include comprehensive quality checks to ensure you spot damaged goods or missing items and can contact your supplier to take care of it. 

Inaccurate inventory data

Inventory counts show stock levels for each product SKU, yet errors when receiving inventory can lead to inaccurate stock quantities in your inventory management system. 

For example, if you order 100 items but only see 98 in your POS system, the issue could be that a PO was accepted before ensuring it contained the right amount of stock. The supplier only packed 98 items—a mistake that wasn’t spotted by staff before they marked the PO as received and organized the products in the stockroom. 

Ensure your receiving process involves counting each shipment’s inventory and comparing the count to its PO to prevent inventory discrepancies. 

Improve stock receiving at your store

It’s not just bestselling inventory that deserves careful treatment. By implementing effective inventory control processes for receiving new stock at your store and warehouse, you’ll get goods unloaded and ready for sale while ensuring stock levels in your POS system are accurate.

Receiving Inventory FAQ

What is receive inventory?

Receive inventory is the process of tracking the receipt of goods and supplies into a business. It is a key component of inventory management and is used to ensure that stock levels are accurate and up to date. The process involves recording information such as the quantity, type, cost, and other details of the items received.

What is the proper way to receive inventory?

The proper way to receive inventory is to first inspect the shipment for any obvious damage, verify that the items match the packing list, and then sign and date the packing list as proof of delivery. Next, the items should be counted and checked against the purchase order to ensure accuracy. Finally, the items should be stored in the appropriate location and the inventory tracking system should be updated to reflect the new inventory levels.

How do you receive inventory in a warehouse?

In order to receive inventory in a warehouse, the following steps should be followed:

1. Check the shipment against the purchase order.
2. Count the items, if necessary.
3. Record the quantity and condition of the items on the receiving log.
4. Check for any damaged items.
5. Properly store the items in the warehouse.
6. Notify the appropriate personnel that the items have been received.
7. Create a delivery receipt and provide a copy to the supplier.
8. Update the inventory records.