SOP for Handling and Reporting Shortages in Raw Material Shipments – V 2.0

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SOP for Handling and Reporting Shortages in Raw Material Shipments – V 2.0

Standard Operating Procedure for Handling and Reporting Shortages in Raw Material Shipments

Department Warehouse / Quality Assurance / Procurement
SOP No. SOP/RM/017/2025
Supersedes SOP/RM/017/2022
Page No. Page 1 of 15
Issue Date 01/02/2025
Effective Date 05/02/2025
Review Date 01/02/2026

1. Purpose

This Standard Operating Procedure (SOP) sets forth a clear, GMP-compliant method for identifying, documenting, and resolving shortages in raw material shipments. A shortage occurs when the quantity of delivered materials is less than the quantity stated on the Purchase Order (PO) or indicated in the supplier’s shipping documents. By consistently following these guidelines, the organization can:

  • Maintain accurate inventory records.
  • Promptly inform Procurement and Quality Assurance (QA) of any discrepancies.
  • Initiate appropriate corrective measures, such as supplier notification or additional shipments.
  • Ensure compliance with internal procedures and regulatory standards regarding material traceability.

Properly managing and reporting shortages helps the company avoid production delays, financial discrepancies, and potential quality risks associated with incomplete shipments. This SOP supports timely communication with suppliers and fosters a streamlined receiving process.

2. Scope

This SOP applies to all raw material deliveries arriving at the facility’s warehouse or receiving dock, including active pharmaceutical ingredients (APIs), excipients, intermediates, and other consumables. It covers:

  • Initial inspection of incoming raw materials.
  • Verification of quantities against Purchase Orders (PO) and supplier documents.
  • Documentation of shortages and communication with relevant departments (Procurement, QA, Finance if needed).
  • Resolution procedures, such as requesting a replacement shipment or updating inventory records.

All Warehouse Personnel, QA, and Procurement staff involved in receiving, inventory management, and supplier relations must adhere to these procedures for handling shipment shortages. Any discrepancies discovered after the materials have been moved to storage also fall under this SOP if they relate to under-delivery.

3. Responsibilities

  • Warehouse Personnel:

    • Compare the delivered quantities with the PO and the supplier’s packing list or invoice upon receipt.
    • Note any shortages in the Raw Material Receiving Register (Annexure-1) and promptly inform Procurement and QA.
    • Assist in segregating or labeling affected shipments until a resolution is determined by Procurement or QA.
    • Update the inventory management system (if applicable) to reflect the actual quantity received.
  • Procurement Department:

    • Investigate shortages by contacting the supplier to rectify the discrepancy (e.g., arrange for additional shipments, issue credits, or revise invoices).
    • Update Purchase Orders if necessary to reflect changed quantities or expected delivery schedules.
    • Coordinate with Finance to ensure that payments align with the actual delivered quantities, avoiding overpayment for missing items.
  • Quality Assurance (QA) Team:

    • Review and approve any decisions regarding partial acceptance, quarantine, or rejection of shipments impacted by shortages if product integrity is in question.
    • Oversee any deviations or non-conformances raised due to incomplete deliveries, particularly if they pose risks to production or product quality.
    • Collaborate with Procurement on corrective actions if recurring shortages indicate supplier performance issues.
  • Finance Department (If Involved):

    • Validate that the supplier’s invoice matches the confirmed received quantity, adjusting payments accordingly.
    • Retain or release funds in accordance with the contract terms and agreed-upon resolution with the supplier.

4. Accountability

The Warehouse Manager is responsible for ensuring that the receiving team consistently identifies and documents shortages following this SOP. The Procurement Manager coordinates with suppliers to resolve shortages and updates the PO or contract as needed. The QA Manager must be informed of any partial or incomplete deliveries that could affect material compliance or production schedules, and ultimately decides if any quality or regulatory actions are required. Any changes to this SOP require review and approval by QA Management.

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5. Procedure

5.1 Verification of Quantities During Unloading

As soon as the shipment arrives, Warehouse Personnel perform initial checks to confirm that the number of pallets, boxes, drums, or bags align with the supplier’s documents and the PO.

  1. Document Cross-Check

    1. Obtain the PO, supplier’s packing list, and any relevant invoices from Procurement. Confirm that the item descriptions, batch numbers, and total quantities match the delivery documents.
    2. If the documents are incomplete or missing, note this in the Raw Material Receiving Register and notify Procurement and QA. Shortages may not be fully verifiable until the missing paperwork is provided.
  2. Physical Count

    1. Count each container (e.g., bags, drums, boxes) upon offloading. For large shipments, organize containers in groups corresponding to each line item on the PO.
    2. Record the actual count in the receiving log. If a shortfall is immediately apparent (for instance, 90 containers arrive when 100 were expected), mark it as a shortage for further evaluation.
  3. Packaging Integrity

    1. Check for any external damage or tampering that could indicate partial shipment or pilferage. If containers appear to have been opened or re-sealed, advise QA and list these units as “Suspect” pending further investigation.
    2. If some items are missing but others are intact, segregate the complete containers from partial or suspicious ones for accurate record-keeping.

5.2 Documentation of Shortages

Any discrepancy between the received count and the expected quantity must be documented in detail to facilitate prompt resolution.

  1. Raw Material Receiving Register Entry

    1. In the Raw Material Receiving Register (Annexure-1), record the shortfall under “Remarks.” Include the PO number, supplier name, material description, and the actual vs. expected quantity.
    2. Enter the date of receipt and initial the entry. If the warehouse uses an electronic Warehouse Management System (WMS), update the shortage there as well.
  2. QC/QA Notification

    1. If the shortage impacts critical production timelines or if the missing items are part of a high-risk or essential batch, alert QA immediately. QA may advise special handling for partial shipments, such as immediate quarantine or partial release.
    2. QC involvement may be minimal unless the shortage raises questions about batch integrity (e.g., if labeling or container counts don’t align with the CoA or packing list). However, keep QC informed if any suspect items are quarantined for further inspection.
  3. Deviation or Non-Conformance Reports (If Applicable)

    1. For significant or recurring shortages, QA or the Warehouse Manager may initiate a deviation report referencing the batch number, PO number, and extent of the shortfall. This helps track supplier performance and internal handling efficiency.
    2. Procurement may assist in investigating the root cause, whether due to supplier error, shipping mishandling, or internal miscounting. A CAPA plan might be implemented if the issue is systemic.

5.3 Immediate Communication with Procurement

Timely notification enables Procurement to reconcile documentation, negotiate with the supplier, or arrange for supplementary shipments as needed.

  1. Formal Shortage Notification

    1. As soon as the shortage is identified, email or call the Procurement Department, providing details:
      • PO number and line item reference
      • Material name and batch (if known)
      • Quantity expected vs. quantity received
      • Any supplier reference (packing list ID, invoice number)
    2. Attach photos or scanned documents if the shortage is significant or if packaging anomalies suggest tampering or partial shipments.
  2. Supplier Follow-Up

    1. Procurement contacts the supplier to verify if the discrepancy is an oversight, partial shipment plan, or a documented shortfall. The supplier should confirm the correct count and provide a resolution (e.g., additional shipment, credit, or revised invoice).
    2. Record the communication details—dates, names, and decisions reached—in the PO file or a designated shortage log. Keep QA informed of any expected timelines for material replacement if production schedules are impacted.
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5.4 Quarantine or Partial Acceptance

Based on QA’s directives and the nature of the shortage, the Warehouse may proceed with partial acceptance or implement quarantine measures to avoid using incomplete batches.

  1. Partial Shipment Labeling

    1. If the received materials are otherwise acceptable but under-delivered, QA may approve partial acceptance. Warehouse Personnel should label containers with the actual received quantity and note “Partial Shipment” if a second delivery is expected.
    2. Update the inventory system to reflect the partial quantity, ensuring no confusion arises when reordering or scheduling production runs based on the original PO amount.
  2. Quarantine for Verification

    1. If the shortfall suggests deeper issues (e.g., possible mislabeled materials, sealed containers appear tampered with), QA can require the entire shipment or specific containers to be quarantined pending supplier clarification or inspection.
    2. Securely store these items in the quarantine area with a clear label indicating “Shortage Issue” or “Awaiting Supplier Confirmation.” Record the quarantine in the receiving log and any WMS used.
  3. Final Disposal or Reconciliation

    1. If the supplier confirms a mismatch or missing items, the Warehouse either awaits the supplementary shipment or returns incorrect items if the situation warrants. Adjust the inventory accordingly.
    2. Once the shortfall is resolved—either by receiving the missing items, adjusting the invoice, or concluding a supplier credit—update all records to finalize the transaction. QA can release the quarantined lot if applicable.

5.5 Inventory and Financial Updates

Warehouse personnel finalize stock counts, while Procurement or Finance handles invoice reconciliation to reflect actual quantities.

  1. Adjust Inventory Records

    1. Enter the correct received quantity into the inventory management system or Raw Material Receiving Register. Clearly note that a shortage occurred, referencing the date and any relevant notes or QA instructions.
    2. If a second shipment arrives later to cover the shortfall, treat it as a separate receiving entry, cross-referencing the original PO and shortage record to maintain a coherent audit trail.
  2. Invoice and Payment Reconciliation

    1. Finance ensures the payment amount correlates with the actual received quantity rather than the PO total if the shortage remains unresolved. If the supplier’s invoice reflects the full PO quantity but materials are short, Finance should withhold or adjust payment as guided by Procurement’s negotiations.
    2. Document all invoice adjustments or supplier credits in the ERP or accounting system, referencing the shortage record. Retain these notes in case of audit or subsequent supplier disputes.
  3. Ongoing Supplier Evaluation

    1. Repeated shortages from a single supplier may prompt a performance review. Procurement and QA can collaborate to determine if the supplier remains on the Approved Vendor List (AVL) or requires additional contractual stipulations to prevent future shortfalls.
    2. Keep a log or summary of shortage incidents, including their resolutions, to analyze trends and implement corrective actions if a pattern emerges.
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5.6 Final Closure and Documentation

Proper record-keeping is essential for GMP compliance, regulatory audits, and internal accountability. All actions and communications concerning shipment shortages must be traceable.

  1. Receiving Register Completion

    1. Warehouse Personnel update the Raw Material Receiving Register (Annexure-1) once the shortage is resolved. Include final remarks such as “Shortage Resolved: Supplier Credited” or “Additional Shipment Received on [Date].”
    2. Ensure each entry is signed or initialed by the responsible individual, indicating closure of the shortage record.
  2. Procurement and QA Records

    1. Procurement keeps copies of all supplier communications, updated POs, and any credit notes or revised invoices in the procurement file.
    2. QA retains any deviation reports or non-conformance records relating to the shortage in the quality management system. Mark them as “Closed” once QA confirms the resolution is adequate.
  3. Retention and Audit Readiness

    1. Store all records, both physical and electronic, for the mandated retention period (commonly 5–7 years). Access to these records must be restricted to authorized personnel only.
    2. Any future audit or supplier performance evaluation can reference these records to confirm the organization’s diligence in identifying and resolving shortages.

6. Abbreviations

  • SOP: Standard Operating Procedure
  • GMP: Good Manufacturing Practice
  • QA: Quality Assurance
  • QC: Quality Control
  • PO: Purchase Order
  • WMS: Warehouse Management System
  • ERP: Enterprise Resource Planning
  • CAPA: Corrective and Preventive Action
  • AVL: Approved Vendor List

7. Documents

  1. Raw Material Receiving Register (Annexure-1)
  2. Sampling Log (Annexure-2) (If sampling is needed for confirmation)
  3. Purchase Orders (POs) and Supplier Invoices
  4. Deviation or Non-Conformance Reports (if applicable)
  5. Supplier Communications and Credit/Invoice Adjustments

8. References

  • 21 CFR Part 211 – Current Good Manufacturing Practice for Finished Pharmaceuticals (US FDA)
  • EU GMP Guidelines Part I – Basic Requirements for Medicinal Products
  • ICH Q7 – Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients
  • Company-Specific Procurement, QA, and Warehouse Policies
  • Approved Vendor List (AVL) Documentation

9. SOP Version

Version: 2.0

10. Approval Section

Prepared By Checked By Approved By
Signature
Date
Name
Designation
Department

11. Annexures

Annexure-1: Raw Material Receiving Register

Date Supplier Name Material Name Batch Number PO Number Quantity Ordered Quantity Received Remarks
01/02/2025 ABC Pharma Supply API X X-2025-001 PO-55555 100 kg 90 kg Short by 10 kg
02/02/2025 XYZ Chemicals Excipient Y Y-2025-002 PO-66666 50 bags 45 bags Possible partial shipment

Annexure-2: Sampling Log

Date Material Name Batch Number Sampling Personnel QC Test Performed Result Remarks
01/02/2025 API X X-2025-001 John Doe Basic ID Test Pass Spot Check for Short Delivery
02/02/2025 Excipient Y Y-2025-002 Jane Smith Visual Inspection Pending Bags in Good Condition, Short Quantity

Revision History:

Revision Date Revision No. Revision Details Reason for Revision Approved By Page No. Ref. Point No. Details of Revision
01/01/2024 1.0 Initial Version New SOP Creation QA Head All All Established procedure for reporting and handling raw material shortages
01/02/2025 2.0 Expanded Steps for Resolution Standardization of Document QA Head All All Added clearer roles for Procurement and Finance; clarified inventory updates
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