How Retailers Should Handle Unordered Merchandise: Inspection, Disposition, And Documentation

Unordered Merchandise refers to product shipped to a retailer without a corresponding authorized order.

Retailers and their warehouse teams need a repeatable standard operating procedure for unordered merchandise that minimizes risk to inventory accuracy, preserves evidence for disputes, and returns goods efficiently. The correct workflow prevents accidental putaway, protects shelf integrity, and speeds resolution with vendors or carriers.

Initial Intake And Quarantine

At receiving, dock staff should immediately flag shipments that lack a matching PO or ASN. Place those pallets or cartons in a clearly marked quarantine area physically separated from regular putaway lanes. Locking or tagging the goods prevents accidental processing and provides time for administrative review.

• Tagging: Apply a visible "Unordered Merchandise" tag with date, time, and employee ID.
• Segregation: Move goods to a designated quarantine location to avoid cross-contamination with sellable stock.
• System Block: Use the WMS to create an exception record preventing putaway or invoicing.

Inspection And Evidence Collection

Before contacting the vendor, gather inspection data. Photograph labels, pallet tags, carrier waybills, serial numbers, and any visible damage. Record SKU and quantity counts and compare those to ASN data if available. This evidence supports chargebacks and helps the vendor trace the error.

• Photos: Capture wide and close-up images of packaging, labels, and any identifying marks.
• Counts: Verify SKU counts and record discrepancies in the exception log.
• Paperwork: Scan the carrier's BOL, delivery receipts, and any attached pack slips.

Notification And Authorization Steps

Notify the vendor and carrier promptly with the documentation collected. Request return authorization (RMA) or direction for disposition. Agree on who will pay return freight and the timeline for pickup; document that agreement in email or the vendor portal.

• Vendor Contact: Send a standardized exception notice with evidence attached.
• RMA Process: Use existing vendor portals or email templates to obtain written return authorization.
• Timeline: Set a clear pickup window to avoid long-term storage costs.

Disposition Options

Disposition depends on vendor instructions and item condition. Typical options include return-to-sender, vendor pickup, vendor-authorized disposal, or vendor-specified donation. For perishable or regulated goods, follow safety and compliance rules: temperature-controlled storage, chain-of-custody documentation, or hazardous materials protocols.

• Return-To-Sender: Vendor arranges carrier pickup and covers freight and handling.
• Hold For Vendor Pickup: Retailer stores goods at vendor expense until pickup.
• Donate/Dispose: Vendor authorizes disposition; retailer documents destruction or donation receipts for compliance.

System Updates And Financial Reconciliation

Update the WMS and ERP to block the unordered goods from being counted as available inventory. Create an exception transaction that records status, evidence, and correspondence. Once vendor instructions are fulfilled, post appropriate inventory adjustments and, if applicable, process a vendor credit or forward a chargeback per contract terms.

• Inventory Status: Mark quantity as quarantined and non-available until resolution.
• Accounting Entries: Post adjustments only when legal ownership or financial resolution is documented.
• Chargebacks: Apply deductions following contract rules and maintain dispute records.

Warehouse SOP Example

1) Receiving identifies a mismatched delivery and applies an "Unordered" tag. 2) Staff photographs shipment and uploads images to the WMS exception case. 3) Receiving notifies purchasing and the vendor with package evidence. 4) Vendor authorizes return; carrier schedules pickup within agreed days. 5) Upon pickup, receiving records the removal and orders the vendor credit.

Tips To Reduce Recurrence

• Enforce EDI/ASN Rules: Reject deliveries that fail PO/ASN validation unless pre-approved in writing.
• Vendor Performance KPIs: Track unordered shipment frequency and include corrective action plans in vendor reviews.
• Train Staff: Regularly train receiving on exception identification and documentation standards.
• Use Technology: Barcode scanning, photo capture in the WMS, and automated exception notifications speed resolution and improve evidence quality.

In short, the Unordered Merchandise exception requires a consistent receiving SOP: quarantine immediately, document thoroughly, notify the vendor, and follow contractual disposition instructions so inventory integrity and financial recovery are preserved.