Centralised vs. decentralised goods receipt: tasks, advantages and disadvantages

• The core tasks of goods receipt are receiving the goods, checking quantities and quality control.
• Goods receipt is usually centralised: space, equipment and testing tools only need to exist once, and specialised staff inspect more professionally.
• Just in Time and Kanban argue for a decentralised goods receipt directly at production.
• Parts suited to direct delivery are those with no or little inspection effort and in sufficiently large quantities.

What are the tasks of goods receipt in the first place?

The areas of responsibility of goods receipt are:

Source: Kuhlang et al., 2010

A key goal in goods receipt is to achieve short throughput times for the material, short information paths and low overall costs. To do this, a large number of design features have to be taken into account.

These can be roughly divided into the following areas:

• Nature of the goods
• Spatial layout of goods receipt
• Structural design
• Technical equipment
• Organisation

Source: Kuhlang et al., 2010

Nature of the goods

The following aspects can be relevant to the nature of the goods: their condition, shape, size and dimensions, their sensitivity, the distribution of deliveries over time, which checks are required and how much effort unpacking takes.

Structural design

On the structural side, safety equipment, other installations, space requirements and buildings, and the design of the loading zone must be taken into account.

Technical equipment

For the technical equipment, you need to clarify which testing and measuring devices are required, how waste is disposed of and how staging and storage are handled.

Organisation

On the organisational side, you need to clarify where goods receipt should sit within the company's organisation, which tasks it should and should not perform, how the processes work, which information is passed on and how, and how long the goods should remain in goods receipt.

Centralised goods receipt

Receiving the goods and checking quantities are often combined in one location to keep transport routes within the plant short. These areas also usually don't require a high level of specialist knowledge from staff. In addition, quality control is often located nearby as well, so that the material flow isn't interrupted unnecessarily.

In most cases, therefore, the entire goods receipt is handled centrally. There are the following reasons for this:

Deliveries usually arrive by lorry or rail: handling them requires adequate space and special equipment such as forklifts. It makes little sense to have these several times over in the plant with low utilisation.

Quality control requires specialist knowledge and appropriate measuring equipment: here, too, it would not be economical to have this sometimes expensive measuring equipment, or even laboratories, several times over in the plant.

Professionalisation through focus: by focusing staff on receiving and inspecting materials, a higher level of professionalism is achieved, and these activities aren't simply done "on the side".

Source: Kuhlang et al., 2010

However, centralised goods receipt is not a cure-all and not the best approach in every situation. So let's now look at decentralised goods receipt.

Decentralised goods receipt

Especially in the automotive and automotive supplier industry, there are current trends that argue against a centralised goods receipt. These are supply concepts such as Just in Time and Kanban, which aim at procurement synchronised with production. Shorter delivery times and fast handling are an advantage here, and therefore so is having goods receipt close to the respective production area. The result is a direct integration of goods receipt into production.

All this is made possible by close contact with purchasing, for example to handle complaints about qualitative or quantitative deviations in deliveries and to ensure delivery dates are monitored. Very close collaboration with suppliers is also necessary, as they have to meet delivery times and quantities to the exact day and also meet the required quality standards.

Cumbersome counting, with unpacking beforehand and repacking afterwards, can be dropped when standardised load carriers are used. A simple visual check is then enough to verify the quantities.

So which parts are suitable for direct delivery to production via a decentralised goods receipt?

All parts are suitable for which

• no goods receipt inspection is required, or
• the inspection effort is low, meaning the goods receipt inspection can easily be carried out by production staff, or
• only samples need to be inspected, which can be taken on delivery and sent to a central inspection body for assessment, and
• the quantities for production are large enough to justify the effort

Source: Kuhlang et al., 2010

So we can see: the decision whether goods receipt should be handled centrally or decentrally not only differs from industry to industry, but also depends on the individual circumstances of the company.

In practice: Lederhosen AG

Let's look at all this using our fictional company, "Lederhosen AG". Lederhosen AG is a traditional mid-sized company that produces and sells traditional costume fashion such as lederhosen and dirndls. It has to supply its own shops as well as its online shop and retailers with products.

At Lederhosen AG, goods receipt has always been handled centrally. However, the goods receipt area is now showing its age. It still complies with current safety regulations, but with a little forward planning there is not much headroom left. In addition, for historical reasons the goods receipt area is somewhat awkwardly located on the plant site. And the issue of waste disposal has never really been solved for good, which is why some of the waste keeps blocking the loading zone.

In short: the goods receipt area has to be set up again from scratch.

In this context, discussions recently arose as to whether goods receipt should continue to be handled centrally at all, or whether it might be better handled decentrally. This was triggered by increased media reports about Kanban and Just in Time production and their decentralised approaches to goods receipt.

At first, the fact that these concepts are mainly used in the automotive and automotive supplier industry was overlooked. It quickly became clear that Lederhosen AG has a simpler production process. The small quantities of parts that production needs and the additional effort of a decentralised goods receipt are out of all proportion to the marginal benefits.

It was therefore decided to continue handling goods receipt centrally and only to set up the goods receipt area itself again from scratch.