MERCHANDISE
HANDLING
PROCEDURE
Noor Rahayu binti Mohd Salleh
Azyati Ilyani binti Aznan
Author:
NOOR RAHAYU BINTI MOHD SALLEH
AZYATI ILYANI BINTI AZNAN
Editor/ Proof Reader:
ZAIDAH BINTI ABDUL AZIZ
Graphic Designer:
NOOR RAHAYU BINTI MOHD SALLEH
Language Reviewer:
SYAFAWATI NOORHAFIZAH BINTI ADNAN ADIL
Published by:
COMMERCE DEPARTMENT
POLITEKNIK UNGKU OMAR
Jalan Raja Musa Mahadi
Politeknik Ungku Omar
31400 Ipoh, Perak
Tel: 05-545 7656
https://www.puo.edu.my
First published 2022
eISBN:
ALL RIGHTS RESERVED. This publication is protected by
Copyright and permission should be obtained from the
publisher prior to any prohibited reproduction, storage in a
retrieval system, or transimission in any form or by any
means, electronic, mechanical, photocopying, recording, or
likewise.
© 2022 Politeknik Ungku Omar. All rights Reserved.
COMMERCE DEPARTMENT
POLITEKNIK UNGKU OMAR
Email: [email protected]/ [email protected]
SYNOPSIS
Inventory is an essential part of a retail
business because it is what the shop is
offering for sale to customers. In order to
achieve customer satisfaction, retailers
have to create, maintain and monitor
accurate inventory records. Hence,
retailers have to take note the procedures
to adhere to and the documents used for
verification. Handling merchandise
procedure explains about ordering,
receiving, checking, marking and stocking
procedure in running a retail operation.
PREFACE
Merchandise Handing Procedure e-book is written based
on Retail Operation 1 syllabus for Polytechnic students.
The objective of this e-book is to assist the students who
use this e-book as their quick reference to get knowledge
and enhance their understanding about Merchandise
Handling Procedure. This e-book also can be used as a
teaching material for Polytechnic lecturers in their
teaching and learning session.
The e-book covers topic on merchandise handling
procedure in ordering, receiving, checking, marking and
stocking merchandise in a retail store. Other than that,
there are also questions for student to do revision about
this topic. We hope this e-book will benefit students in
their learning.
We would like to take this opportunity to thank those who
have contributed directly or indirectly in the preparation
and publication of this e-book.
Noor Rahayu binti Mohd Salleh I Azyati Ilyani binti Aznan
Commerce Department, Politeknik Ungku Omar
2022
i
ABOUT THE AUTHORS
Noor Rahayu Binti Mohd Salleh is a Retail
Management lecturer in Commerce
Department at Politeknik Ungku Omar and
has 11 years of experience in teaching
diploma students. She received her Bachelor
of Business Administration (Hons) Retail
Management from the Universiti Teknologi
Mara (UiTM), Shah Alam. She has previously
worked as a Junior Buyer Executive in Mydin
Mohamed Holdings Berhad (HQ) at Subang
Jaya, Selangor.
Azyati Ilyani Binti Aznan is a Retail
Management lecturer in Commerce
Department at Politeknik Ungku Umar and
has a 10 years of experience in teaching
diploma students. She received her Bachelor
of Business Administration (Hons) Retail
Management from the Universiti Teknologi
Mara (UiTM), Shah Alam. After that, she
pursued her study at Universiti Utara
Malaysia, (UUM) Kuala Lumpur in Master Of
Business Administration (MBA).
T A B L E O F
C O N T E N T S
1 PREFACE i
2 ORDERING 1 - 7
RECEIVING 8 - 10
CHECKING 11 - 12
MARKING 13 - 18
STOCKING 19 - 25
3 DOCUMENTS 26 - 32
4 REVISION 33
5 REFERENCE 34
1st Procedure FORM
ORDERING
PROCEDURE
Purchase Order (PO) is a written
contract authorizing the delivery
of certain goods at specific prices
and times. Ordering is a
request for new
Important! supplies to refill
Know your stock. the inventory and
Know your supplier/vendor. replenish shelves.
Be familiar with store policies
on the ordering procedures.
Ensure sufficient time for the
order to be processed and
sent to the store. 1 I Merchandise Handling Procedure
NEGOTIATION WITH
VENDOR
Negotiation is the process of finding
mutually satisfying solutions when
the retail buyer and vendor have
conflicting objectives.
Negotiate factors:
1.DISCOUNTS-trade,quantity, promotional,
seasonal & cash
2.DELIVERY TERMS-FOB factory, FOB
shipping point & FOB destination
3.PACKAGING
2 I Merchandise Handling Procedure
Types of Discount
Trade discount
Quantity
discount is compensation for
is price reduction performing certain
on purchase large wholesaling or
quantities of retailing services for
merchandise the manufacturer
Seasonal
Promotional discount discount
is provided for is provided for
performing an purchasing and
advertising or taking delivery of
promotional service for merchandise in
the manufacturer the off-season
Cash discount
is offered to the
retailer for the
prompt payment
of bills
3 I Merchandise Handling Procedure
Delivery Terms
Free on Board (FOB) Factory
Is a method of charging for transportation
where the buyer assumes title to the
goods at the factory and pays all
transportation costs for the vendors
factory.
Free on Board (FOB) Shipping Point
Is a method of charging for transportation
in which the vendor pays for transportation
to a local shipping point where the buyer
assumes title and then pays all further
transportation costs.
Free on Board (FOB) Destination
Is a method of charging for transportation
in which the vendor pays for all
transportation costs and the buyer takes
title on delivery.
4 I Merchandise Handling Procedure
Ordering Procedure
1. Check
current
stock
level
2. Fill up
order form
(PO)
Documents
involved:
3. Get Purchase
endorsement Order (PO)
from Price list
authority Previous
delivery order
(DO) or PO
4. Send 5. Call
order supplier to
form to inform/
supplier follow up
the order
5 I Merchandise Handling Procedure
Regular order
is stock order
for line
merchandise
Special order is
order for
merchandise to
satisfy individual
customers rather
than for regular
stock
Reorder point is the
level of inventory
which triggers an
action to replenish
that particular
inventory stock.
6 I Merchandise Handling Procedure
Advance
Order
merchandise
Types of orders with a
longer lead time
Order before the
delivery date.
promises to buy
merchandise orders from favored
that have not been vendors over a
Back filled within the time period of time, with
Order specified and have no detail of colors,
not been cancelled sizes, or shipment
by the buyer. until later.
an order placed Blanket
additional orders with a resident
of the same buyer or vendor with Order
merchandise as no restrictions as to
ordered previously. style, color, price, or
delivery.
Reorder Open
Order
7 I Merchandise Handling Procedure
2nd Procedure
RECEIVING
PROCEDURE
Receiving
merchandise is
the actual
What should be physical receipt
recorded? of merchandise
Date and time from supplier.
Supplier/ Vendor's
name
No. of packages/
cartons
Receiver's name
8 I Merchandise Handling Procedure
Receiving Procedure 1.
In order to speed up the
Receiving
procedures vary goods receiving process a
depending on the designated store employee
size and type of usually the store manager
store. could sign the DO first.
Otherwise, the DO will be
signed after checking.
2. Big store - receive from
central warehouse and
A copy of the DO is kept transfer to the retail outlets
and filed in case a claim Small store - receive from
for lost or damaged central warehouse and/or
from vendor directly
merchandise becomes
3.
necessary.
A record of the number of
packages received, the date
and time, the vendor’s name
and any other facts about
Documents involved: receipt of goods are entered
Receiving log/ file in receiving book/ file
Delivery Order
(DO)/ Invoice (manually/ system).
Purchase order
(PO)
9 I Merchandise Handling Procedure
Shipping Receiving Procedure
1. Inspecting shipment - The first 2. Verifying shipment – After
step in inspecting incoming inspecting the shipment for visual
merchandise is a visual inspection damage, the receiving clerk
of the exterior of each package to should make several verifications.
determine whether the package First, the clerk must verify that the
has been damaged (crushed, shipment was ordered by
punctured) or opened (broken consulting the receiving
seal). department’s file of purchase
orders or a log (schedule) of
3. Logging shipment – To facilitate and incoming shipments.
organize the processing of incoming Second, the completeness of the
shipments, each shipment is logged in a shipment must be verified,
receiving record and assigned a receiving sometimes suppliers ship only
number. The receiving record and number
follow the shipment through the checking, partial orders.
marking and stocking steps of the handling Third, the receiving clerk should
process and serve as a quick reference verify that the actual makeup of
should problems arise. The accounting the shipment is the same as that
department also uses the record to verify describe on the bill of landing
shipment before invoices are paid.
(transportation document
between the shipper and carrier
that serves as a receipt for the
goods tendered to the carrier).
04 10 I Merchandise Handling Procedure
3rd Procedure
CHECKING PROCEDURE
Checking merchandise is
part of the receiving Invoice check - check
procedures to ensure the invoice against
quality and quantity are as
ordered. purchase order
Quantity check - check quantity of goods received
against the amount on the invoice
(Quantity, Colour, Size, Flavours)
Quality check - inspect the inner and outer quality
of the goods
(Style, Material, Workmanship, Physical and Inner
Condition)
11 I Merchandise Handling Procedure
Checking Procedure
CHECK INVOICE/
DELIVERY
1. ORDER/ SLIP
AGAINST
PURCHASE
ORDER
OPEN
2. CONTAINERS/
CARTONS/
PARCEL
UNPACK
3. AND SORT
GOODS
QUANTITY &
4. QUALITY
CHECK
SIGN
DELIVERY
5. ORDER/
RECEIVE
GOODS
12 I Merchandise Handling Procedure
4th Procedure
MARKING
PROCEDURE
Marking the
merchandise consists of
affixing the individual
items with a price tag
and additional inventory
related information that The objective of
is required to stock, marking is to
control and sell the record
merchandise. merchandise
information on
the product.
13 I Merchandise Handling Procedure
The information includes:
Product Price
Code
Merchandise
Classification
Supplier
Delivery/ Code
Expiry Date
14 I Merchandise Handling Procedure
Types of Marking:
Pre priced merchandise
•Price ticketed by the vendors and arrived at the shop with
price tags already attached
•The merchandise will be displayed for sale immediately after
checking
•Pre-priced merchandise from manufacturers can be
placed on shelves with the price labels attached on
the edge of the shelf
Unpriced merchandise
•Merchandise are not pre-priced and do not have
any price ticket attached to them
•Sales associates will have to tag the items based
on the price list provided by the merchandiser or
vendor
Non Marking
•Merchandise that not marked at all.
•Groups of products on special offers can be
displayed in bins or on tables with large price
signs.
Computerized marking
•Adopted the Universal Product Code (UPC) marking
system.
•Input all information (price, date of delivery,
merchandise code, supplier number) into the system
•UPC tags (barcodes) with this information are printed
and attached to the merchandise.
15 I Merchandise Handling Procedure
Main consideration of price ticket information:
Merchandise
Consideration / Usage/ Information
Needed
Methods
Types of Fashion and Sise, color and
merchandise apparel season
Types of
merchandise Perishable Expiry date
Do not require any
Types of Small additional
merchandise stationery information other
than price
Sale item that
Types of
merchandise are limited in Group tag
assortment
Expiry date,
User of Stock control supplier code,
information
price
Method of Price - usually have
presentation Gun tags limited space
Method of Computerized More information
presentation - barcode than price
16 I Merchandise Handling Procedure
Types of price ticket:
Gummed label
- used on items with a
hard surface
like book, plate,
wood, appliances
Pin tickets
- used on items
with a soft surface
like socks
and underwear
String tags
- suitable for soft
merchandise
like dresses, shirts and
trousers
Watch video on how to use the tool here:
https://www.youtube.com/watch?v=IUprEZMkHsw
https://www.youtube.com/watch?v=dr8nX-Wz1Hs&t=4s
17 I Merchandise Handling Procedure
Price Ticket Placement Procedures
Attach the tag in
such way that
1. the merchandise
Price tags should be will not be
placed on the
2. merchandise in a destroyed
consistent manner
(same spot for all the
units of a particular
item).
Important information
such as brand name,
3. expiry date and
ingredients on the item
should not be covered
4. by the price tag
Retailer must ensure
the tags not easily
remove especially who
does not implemented
the computerized 5.
marking system The price
must always
be correct
18 I Merchandise Handling Procedure
5th Procedure
STOCKING
PROCEDURE
Stocking is the
process of filling
the store's shelves
and displays with
The main objective of
planning the stocking merchandise for
sale.
process is to move the
merchandise as close
as possible to the point
of selling.
19 I Merchandise Handling Procedure
In-store stocking is maximising the amount
of display and forward stock and minimizing
the stock in reverse.
Warehouse stocking is used where stocking in
the store may not be feasible. This is used
especially for Fast Moving Consumer Goods
(FMCG) products that are stocked in a warehouse
and only few pieces are on display in the store.
Contract warehousing is warehousing and
distribution activities are outsourced to a third
party.
20 I Merchandise Handling Procedure
Prepare ways of storing:
Forward Stock
is the stock used as a backup
and is hence stored
temporarily on the sales floor
near the selling area.
For example, in the drawer or
cupboards below the shelves
and cabinets above the racks.
Reserve Stock
is the backup stock held in reserve
usually in a central stockroom.
This merchandise is stored off the
selling floor either in the stock room
or at the central warehouse.
It is converted to forward stock or
display stock quickly when the need
arises.
21 I Merchandise Handling Procedure
Procedures of receipt and removal stock:
1. Upon new stock is
received and checked, it
will be stored as either
forward or reserve stock.
2. Prepare stock sheet. A stock sheet is
a record of stock movement. Its
required to record the merchandise
code and quantities of each
merchandise placed in the cabinet or
stock room.
3. Any removal of stock should
be recorded in the stock
sheet and balance updated.
4. More merchandise should be displayed
on the selling floor (forward stock) in order
to encourage selling and to reduce space
and cost. Minimum merchandise kept in the
stock room (reserve stock).
22 I Merchandise Handling Procedure
Stocktaking involves
S T O C K the physical counting
T A K E of every item in the
shop and stockroom.
used to monitor
physical S T O C K
movement of S H E E T /
stocks. C A R D
Daily
Weekly
Monthly
Yearly
23 I Merchandise Handling Procedure
Advantages of Stock Take
to determine the saleable products,
outdated merchandise or damaged
1
goods due for return to suppliers
to retrieve any misplaced
2
merchandise
3 to spring clean the
shop
to rearrange the shelf
4
displays
24 I Merchandise Handling Procedure
Stock Take Procedures
Before:
1. Give advance notice of
the stock take
2. Arrange all stock in
proper order before the
actual stocktaking day
During: 3. Brief staff on the exact
1. Pre number the stock take sheets location they are
2. Record the counts on the stock take designated to stock take
sheets and make sure that there
3. Conduct the stock take with a team are no overlapping areas
of two staff that is a counter and a
checker
4. The counter calls out the
merchandise code / descriptions
and its quantity
5. The checker verifies the count done
by the counter and records the
figure on the stock take sheet
6. Use a pen to fill in the count
quantity. In the case error, cancel
the original number and initial After:
beside the number. Do not erase or 1. Arrange all stock take
use correction pen sheets according to the
serial number and return
them and any unused
sheets to the supervisor
2. The supervisor
counterchecks the
quantity with the
inventory records
25 I Merchandise Handling Procedure
DOCUMENTS INVOLVED IN MERCHANDISE
HANDLING PROCEDURE
A document issued by the transporter to deliver
Delivery goods to another party. It will come together
order with the goods arrived in the store that details
(DO) the items and quantity of items being ordered
26 I Merchandise Handling Procedure
Purchase A written authorization from buyer to
acquire goods or service. Authorizes a
order supplier to deliver to buyer at the price,
(PO) quality level and delivery date
27 I Merchandise Handling Procedure
A detailed list of goods delivered or services
Invoice rendered with an account of all cost. It is
usually in itemized bills which details the
credit transactions only.
28 I Merchandise Handling Procedure
Stock The counting over of goods coming in and out.
This document is used to monitor physical
sheet movement of stocks.
Watch video to record stock card:
https://www.youtube.com/watch?v=SmJiqv41jJo
29 I Merchandise Handling Procedure
Stock The examination or counting over of materials
take or goods on hand as in a stockroom or store.
sheet This exercise is usually carried out once or twice
a year.
30 I Merchandise Handling Procedure
A document used by a buyer to inform a vendor
of the quantity and dollars amount of goods
Goods being returned and requesting that the dollars
return amount be returned to the buyer. This
note document is normally issued when there is a
sales return or when a sales price is overstated.
31 I Merchandise Handling Procedure
VS
32 I Merchandise Handling Procedure
Let's revise!
Receiving
Ordering
Marking &
Stocking
Checking
Scan here to answer question
33 I Merchandise Handling Procedure
REFERENCE
Tang, Angie. & Lim, Sarah. (2012). Retail Operations:
How to Run Your Own Store (2nd edition). Prentice Hall.
(ISBN 978-981-06-7938-5)
Dunne, P. M., Lusch, R. F., & Carver, J. R. (2020).
Retailing (9tth edition). South-Western Cengage
Learning. (ISBN 978-1305511101)
Levy, M., Weitz, B. A., & Grewal, D. (2019). Retailing
Management (10th edition). McGraw-Hill Education.
(ISBN 978-260-08476-4)
https://www.youtube.com/watch?v=IUprEZMkHsw
https://www.youtube.com/watch?v=dr8nX-Wz1Hs
34 I Merchandise Handling Procedure
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