Handling Damaged Goods

When items arrive damaged on a Purchase Order (PO), they should still be received into inventory but separated into a non-allocating Damaged location. This ensures the items do not allocate to Sales Orders while you resolve billing, credits, or replacements with the vendor. The process involves creating a dedicated Damaged location, splitting the receipt line to separate good and damaged quantities, and managing billing or credits accordingly. This keeps inventory accurate and prevents accidental fulfillment of unusable goods.

• Create a Damaged Location Type (Optional) in Admin Settings > Warehouses to categorize Damaged Goods with a Clear Code and Description for easy identification.
• Add a New Location for Damaged Goods by clicking the Plus symbol under Locations, entering a Code and Description (e.g., “Damaged”), optionally assigning the Damaged Location Type, checking Inventory, and leaving Allocate Unchecked to prevent Order Allocation.
• Repeat Location Setup for Each Warehouse to ensure every Receiving Warehouse has its own dedicated Damaged Location.
• Open the Purchase Order and Go to Receipts to begin receiving the items that arrived from the Vendor.
• Enter the Quantity of Good Items in the Received field and confirm they are assigned to the Normal Inventory Location.
• Split the Line Using Add Lot to separate Damaged Quantity from Good Quantity within the same Receipt.
• Enter the Damaged Quantity and Change the Location to the Damaged Location so those items are isolated from Allocatable Inventory.
• Complete the Receipt by clicking the Green Check Mark to finalize the transaction and update Inventory.
• Create the Vendor Bill or Credit as Needed by billing for the Full Quantity if applicable, or generating a Vendor Credit later if you receive reimbursement for the Damaged Items.
• Verify Inventory by Reviewing Item Lots to confirm the Damaged Quantity is stored in the Damaged Location and not available for Allocation.
• Process a Return PO if Required by pulling from the Damaged Location when sending items back to the Vendor.