Definition
A Goods Received Note (GRN) is the receipt confirmation when materials arrive against a purchase order. It captures actual quantity received (vs ordered), condition (acceptable/damaged), short-deliveries and any substitutions. The GRN is what should drive inventory updates — not the PO.
Example
Worked examplePO-3318 ordered 60 lin.m white oak. The GRN records 58.4 lin.m received in good condition, 1.6 lin.m short. Inventory is updated by 58.4. The 1.6 short triggers a back-order or supplier credit note.
Why it matters
Many shops update inventory based on what was ordered, not what arrived. This creates phantom stock — inventory shows material that physically isn't there. A GRN-driven inventory model only counts what actually landed.