Where Do OSD Problems Happen? Common Locations in the Supply Chain

Where do OSD incidents typically occur?

OSD — overages, shortages, and damages — can appear at any touchpoint in the supply chain. Location matters because it often signals the likely cause and guides corrective actions. For beginners, mapping OSD occurrences to specific sites helps prioritize prevention measures.

1. In Transit (Carrier / Freight)

One of the most common places for damage or loss is during transportation. Goods can be exposed to impacts, shifting loads, poor stacking, or environmental extremes (moisture, heat) while on trucks, railcars, containers, or air freight. Theft and pilferage also tend to happen during transit, especially if shipments are left unattended. If OSD is documented at delivery, many organizations first examine carrier handling and shipping documentation.

2. Receiving Dock

The receiving dock is a frequent hotspot for OSD. Errors during unloading, compressed timelines, inadequate dock space, and incorrect checks can lead to miscounts or missed damage. Dock congestion and night-time deliveries increase the risk of mistakes. Because deliveries are a handoff point between carrier and warehouse, this location is critical for documenting condition and quantity at time of receipt.

3. Inside the Warehouse (Storage & Handling)

Once goods enter the warehouse, internal handling — pallet movements, forklift operations, and storage methods — becomes the main risk area for damage. Poor racking practices, overstacking, or incorrect palletization can cause crushed cartons, torn packaging, or total loss. Human error during putaway and inventory moves can also cause shortages if items are placed in the wrong location and subsequently not picked.

4. Picking & Packing Areas

OSD can occur during order picking and packing, where incorrect picks create shortages at ship time and overages occur if extra units are added erroneously. Packing mistakes, such as using the wrong carton or skipping protective materials, can result in damage detected by the customer or at last-mile delivery.

5. Cross-Dock and Consolidation Centers

Cross-docking facilities shift goods quickly from inbound to outbound vehicles. The fast pace and frequent handling increase the chance of miscounts and mishandling. In consolidation centers that combine multiple shipments, errors in matching cartons to orders or in scanning can create OSD events downstream.

6. Returns Processing Areas

Returns are a prime source of discrepancies. Returned goods often arrive without proper documentation or with additional damage. Sorting, inspecting, and reconciling returns require careful procedures to avoid creating false shortages or incorrectly re-entering damaged items into inventory.

7. Retail Stores and End-User Locations

At the retail shelf, shrinkage (theft), misplacement, and customer damage become the dominant causes of OSD-type losses. While these events happen outside the distribution network, they impact overall inventory accuracy and require collaboration between store operations and distribution centers for reconciliation.

8. Vendor / Supplier Facilities

Sometimes the root cause originates upstream at the supplier: incorrect picking, counting, or packaging at the vendor’s facility can create overages or shortages by the time shipments are complete. Packaging failures at origin can also lead to damage during transit.

What the location suggests about likely causes

• Transit-related OSD often points to carrier handling problems, poor load securement, or environmental exposure.
• Dock-related OSD suggests issues with receiving procedures, insufficient inspection time, or inadequate staff training.
• Warehouse internal OSD usually indicates poor storage methods, inadequate racking, or process nonconformance (skipping scanning steps).
• Picking/packing OSD signals problems with SOPs, worker fatigue, or ineffective technology (e.g., non-functioning scanners).
• Returns OSD is often tied to weak reverse-logistics processes and insufficient return documentation.

How location informs corrective actions

• Transit issues: verify carrier SLAs, securement methods, and monitor with GPS and event cameras where possible; require damage notation on delivery receipts.
• Receiving dock issues: enforce standardized inspection checklists, add photographic evidence, and install dock scheduling to reduce congestion.
• Warehouse handling: improve racking and pallet standards, refresh forklift and handling training, and implement periodic cycle counts.
• Picking/packing: deploy pick-to-light or scanning validation, and monitor productivity versus accuracy trade-offs.
• Returns: require return authorization numbers, standardized inspection steps, and quarantine procedures.

Technology and facility design considerations by location

• Install high-resolution cameras at docks and in key storage aisles to capture handling events.
• Use automated dimensioning and weight capture at inbound to confirm shipment characteristics.
• Apply barcode/RFID scanning at every handoff to minimize reliance on manual counts.
• Design receiving areas with adequate space and lighting for thorough inspections.

Example scenario

A distribution center notices a spike in damaged units arriving from a particular carrier. Investigation reveals that the damage occurs on long-haul legs where pallet straps were not consistently used and pallets shifted during transit. The resolution involves carrier retraining, revised securement requirements, and requiring photos at handover. Damage rates return to normal within weeks.

In summary, OSD can occur anywhere goods move or are processed. Pinpointing where incidents occur enables targeted fixes — whether process changes, training, layout improvements, or technology investments — making resolution faster and more effective.