Warehousing permits for timely delivery and improved distribution, leading to increased labor productivity and greater customer fulfilment. It also helps reduce mistakes and enhance the order fulfillment procedure. Plus, it allows to keep your goods in the safe and controlled area, and therefore protects your goods from getting lost or stolen through handling. It offers storage for the finished goods and also comprises packing and shipping of the order. Effective warehousing provides asignificant economic benefit to the business as well as the customers.
Importance of Warehousing
A warehouse is basically a place used for the storage or accumulation of goods. Warehousing is defined as “an assumption of responsibility for the storage of goods.” For a small business, having a warehouse somewhere can help reduce the time between, when products are produced and when they are consumed. In this way, you can sell and deliver faster gaining income more quickly to continue investing and selling. We call this "time utility.”
The main functions of a warehouse include:
Storage: This is the primary function of warehousing. Surplus commodities that are not immediately requested can be stored in warehouses. They can be supplied to customers as needed.
Price Stabilization: Warehouses, largely thanks to their ability to improve a business’ time utility, play a vital role in stabilizing product prices. If products can be stored safely in a warehouse, for example, then businesses can control their supply, avoiding a fall in prices when supply is in abundance, as well as a rise in prices when supply becomes scarce.
Risk bearing: Before they are sold, goods are exposed to a number of risks such as theft, water damage, fire, etc. Warehouses are constructed to minimize these risks.
Financing: It is possible for the owner of the goods, stored in a warehouse, to raise loans from the warehouse’s owner against the goods that are stored inside of it. In this way, goods act as security for the warehouse’s owner. Similarly, banks and other financial institutions can also advance loans against warehouse receipts. Warehousing thus serves as a source of finance to meet business operations.
Grading and Packing: Many warehouses provide facilities for packing, processing, and grading goods. This means that they can act, not just as storage units, but also as packaging centers for the businesses that use them
Warehouses have six main areas:
Different warehouse functions are distributed across different areas to ensure a better organization. The various warehouse areas include
Five different types of warehouses:
Sizes and types of businesses need different types of warehouses.
You need to choose the right kind of warehouse for your business. While this can be challenging, companies need to consider the fundamental requirements regarding their business warehousing needs. There are numerous factors that business owners must evaluate before making a final decision.
Private Warehouse: These warehouses are owned by individual producers, manufacturers, wholesalers, etc., for the storage of their own goods. They are built by their owners according to the nature of the goods to be stored. Large companies usually have their own warehouses for their specific needs.
Example: The department store chain, Debenhams, has its private warehouses to stock hundreds of stocks.
Public Warehouse: These warehouses are established as independent units for the storage of goods in exchange for a storage fee. they are licensed by the state and their methods of operation and rates of charges are controlled and regulated by the government. Public warehouses offer inventory management , physical inventory counts, as well shipping services.
Example: Reem is thinking about renting a public storage for her products. She will analyze th best location, monthly fees and other services.
Co-operative Warehouse: The members of a co-operative warehouse can store their goods on a rental basis, which is comparatively cheaper than private warehouses. Non-members can also store goods in a co-operative warehouse by paying the members rent. Sometimes, co-operative warehouses can specialize in the needs of certain types of business.
Example: Three entrepreneurs joined together to rent a big warehouse. They will split the costs between them and any new members that might join.
Distribution Centre: A distribution centre or distribution warehouse is a place where items are stored before they are distributed. In other words, it serves as storage for products from the manufacturer to the distributor before these products are distributed to retail customers. distribution centre's are primarily used to ensure efficient distribution.
Example: Mohammed has a small warehouse where he stores the wooden furniture he makes so that the customers can pick them up by themselves, since he has no shipping service.
Cold Storage: A cold storage warehouse is a climate-controlled warehouse and is used to store frozen products. Cold storage is primarily used to keep food from spoiling, prior to its transportation or sale.
Example: Summer is coming and Sarah will need extra space and refrigerators to store chocolate bars!
The Main factors which we need to consider while choosing a warehouse.
Logistics could have many steps
In addition to its functions, logistics can be broken down into several categories, as follows: