What is Warehousing? How Many Types, Functions And Processes
What is Warehousing?
- A warehousing is a large commercial storage space or building where a company keeps many things in an organized manner to improve its distribution. A place where goods are stored until they are shipped to retailers, distributors, or customers.
- Businesses can benefit from warehousing in many ways, including keeping inventory more secure, managing it efficiently, and streamlining the shipping process. These warehouses have become an important part of global supply chains over the years.
Why is warehousing important?
- It helps to store, ship, and distribute goods in one place. This makes it easier to track and manage inventory effectively and reduces transportation costs.
- Having a central location for your products gives you control over your products and helps ensure customers receive their orders on time.
- The entire process is insured, which means that the product owner is compensated if the products are damaged or stolen. And keeping products in a temperature-controlled warehouse prevents unwanted changes.
Types Of Warehouses
There are different types of warehouses. Each is designed to meet specific storage and distribution needs. Let’s look at some of them:
1. Public Warehouse
A public warehouse is a warehouse owned by a government agency that is available to private sector companies. These warehouses are rented out for commercial or personal use. It is an attractive option for business owners. New or growing businesses typically use these warehouses. A public warehouse is also commonly known as a bonded warehouse.
- Accessible to the public
- An inexpensive option for new businesses
- Suitable for seasonal traders
- Suitable for short-term storage
2. Private Warehouse
Private warehousing is when private companies own or rent warehouses to store their goods. Due to the high cost of construction and maintenance of these warehouses, the number of warehouses is limited. These types of warehouses can only be purchased by large companies.
- Increased control over building facilities
- It is ideal for companies requiring a marked long-term presence. Provides a highly specialized space for business activities.
3. Smart Warehouse
A popular large-scale warehousing option is the smart warehouse. It is a warehouse that automates storage and fulfillment processes with AI such as robots and drones. Smart warehouses seek to make their order fulfillment and inventory management a more accurate and faster process for large e-commerce companies like Amazon, and Flipkart.
- Inventory management is more accurate
- Automated functions prevent human error and save labor.
- Increases security in facilities.
- Provides insight into overall business performance.
4. Cooperative Warehouse
- A cooperative warehousing is a place owned or leased by a cooperative society. Many companies tend to co-operate in this space and access to co-operative warehousing saves money for all companies.
- This cooperative warehouse is especially common among farmers or wineries. These businesses can easily store their products at this location and keep them longer, which will also increase the co-op member’s profits over time.
5. Consolidated Warehouse
Consolidation warehouses are warehouses that collect small shipments from various suppliers to one geographic location. Consolidating these smaller shipments is an attractive feature for companies that don’t have large inventories, such as new companies or startups. These exports should be for one region only.
6. Bonded Warehouse
- A bonded warehousing is a warehouse where imported goods are stored before customs duties are cleared and the products are paid for. These warehouses are usually located near ports. Customs duties must be paid before the goods are removed from them.
- The government or a private company may run these bonded warehouses. Importers can inspect their goods whenever they want. Goods can be taken pro-rata after paying a share of customs duty.
7. Government Warehouse
- Government warehousing is one owned by the government and used by private or public businesses. Government warehouses are generally a better choice than public warehouses.
- If a business fails to pay its rent on a government warehouse, the government can easily dispose of the goods to recover that rent.
8. Cold Storage Warehouse
A cold storage warehouse is a warehouse used to safely store perishable goods such as frozen foods, dairy products, and pharmaceuticals. These warehouses help ensure that the products are safe avoid any loss and regulate the environmental conditions before delivery.
- Commonly used by pharmaceutical companies
- Attractive to businesses that require certain conditions for rare products such as artwork or plants.
9. On-Demand Warehouse
- With the rise of online commerce, on-demand warehousing has become more popular. This warehousing is a warehouse offered to merchants who need to connect with companies that have a large amount of space.
- It also provides an attractive option for businesses that require temporary or seasonal storage. On-demand warehousing, like cooperatives, is ideal for merchants who want to consolidate their inventory needs.
10. Distribution Centers
Distribution centers are warehouses that carry large quantities of goods to move goods to customers or retail locations quickly. Goods stored in these centers are quickly moved through the supply chain. Distribution centers are very important for communication between suppliers and customers and not only for inventory storage but also for distribution, order fulfillment, and export preparation.
- Generally cheaper to use for companies selling to wholesalers.
- They are designed to increase overall efficiency for inventory management.
- Long-term product storage requires less money.
Functions Of Warehouse
Unnecessary surplus materials can be stored in warehouses. They can be delivered to consumers on demand. This is the purpose of warehousing basis.
Price stability
Warehouses play an important role in price-fixing operations. These are accomplished by installing a temporary application. When the supply is high the price is reduced and when the supply is low the price is raised.
Avoiding risks
- When goods are stored in warehouses, there are many risks such as theft, fire, deterioration, etc. Warehouses are constructed to minimize all these risks. Warehouses The person who stores the goods is called the bailer and the keeper of the warehouse is called the bailee.
- The main responsibility of the custodian is to protect and properly manage the goods in the warehouse and keep them safe without any danger. The warehouse keeper is liable to the owner of the goods in case of any damage to the goods.
Financial support
The owner of the goods can get loans from the warehouse keeper in exchange for their product. These loans are given by banks and other financial institutions based on the warehouse revenue. This helps the business owner as a source of finance to meet their operational needs.
Packing and grading
Warehouses provide packaging processing and grading services for goods.
Benefits Of Warehouse
Reduced Transportation Costs:
Warehousing serves as a strategy for the distribution of goods. By consolidating their products and sending them to different locations in bulk, transportation costs per unit are reduced. This results in significant savings in costs such as bulk shipping and distribution conversion labor.
Storage Location:
Warehouses provide adequate storage space for their products. They are usually equipped with shelves and pallet racks. Warehouses also provide a secure environment, protecting goods from theft, damage, and adverse environmental conditions.
Seasonal Demand:
Warehouses act as intermediaries for traders dealing with fluctuations in seasonal demand. These goods can be efficiently distributed only when the demand for goods increases.
Order Fulfillment:
Warehouses are strategically positioned to reduce delivery time when customers place orders. It is easy to make the customer’s products quickly and pack and ship the products quickly. This quick ordering supports the growth of e-commerce business by meeting customer satisfaction and expectations.
Strategic Location:
Warehouses are strategically positioned near transportation hubs, ports, and key customer markets. By choosing these places, it reduces the cost and time for transportation.
Process Of Warehousing
The right warehousing process depends on the size of the operation, the type of warehouse and storage, the culture of the organization, the temperature of the product, and the amount of goods moving through the facility. The main 5 processes in the warehouse operation are:
- Receiving
- Putaway
- Taking
- Packing
- Shipping
1. Receiving
Receipt is one of the most important processes in warehousing as it involves a lot of activities, any disruption of which affects the entire operation. After checking the documents of the goods and all the inspections, the goods are transported to the loading area.
2. Putaway
Putaway is the process of moving goods from the receiving area to the place where they are stored. They are easily located and distributed by storing goods that match each other. Operators handling the putaway process ensure proper storage space is found and placed in their designated space after completion.
3. Taking
It is the process of collecting goods before shipping. It involves the use of significant resources. It is one of the processes that greatly affects the productivity of the supply chain.
4. Packing
Packing means packing all the ordered items in a suitable container, printing the relevant label, and preparing all the items in the sales order for shipment. Choose the right courier service to complete your delivery.
5. Shipping
Shipping is the process of sending your orders to their customers. Shipments are packed in advance to avoid clutter during staging, which can lead to late delivery and confusion.
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