Topics: Warehouses, Logistics, Inventory Pages: 13 (3097 words) Published: August 24, 2014


A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parts of towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets The need for a warehouse arises due to the time gap between production and consumption of products. Warehousing or storage refers to the holding and preservation of goods until they are despatched to the consumers. By bridging this gap, storage creates time utility.


Warehouse can play a key role in the integrated logistics strategy and its building and maintaining good relationships between supply chain partners. Warehousing affects customer service stock-out rates and firm’s sales and marketing success. A warehouse smoothens out market supply and demand fluctuations. When supply exceeds demand, a demand warehouse stores products in anticipation of customers requirements when Demand exceeds supply the warehouse can speed product movement to the customer by performing additional services like marking prices, packaging products or final assembling etc.

Warehousing can be defined as a location with adequate facilities where volume shipments are received from production center, which are then broken down into particular order and shipped onwards to the customer.

Warehousing is an integral part of any logistics system. The warehouse is a link between producer and customer.

Out-bound warehouse help consumers buy on demand without a near by production plant warehousing cost are about 10% of total integrated logistics costs for most companies.


1. Private Warehousing
2. Public Warehousing
3. Contract Warehousing

Private Warehousing

A firm producing or owning the goods owns private warehouses. The goods are stored until they are delivered to a retail outlet or sold. Potential advantage of using a private warehouse is the ability to maintain physical control over the facility, which allows mangers to address loss, damage, and theft. When not in use they can rent it out.

The construction and maintenance of private warehousing can be extremely costly. All the expenses have to be carefully analyzed and evaluated. These are: i. Fixed expenses and building and land acquisition costs which are high; ii. Expenses incurred on ensuring that warehouses are properly equipped with material-handling equipment like conveyors, fork lifts, hand trucks, racks and bins, and dock levelers; iii. The costs of salaries of staff required for peak activity periods which can be very high since retrenchment during slack periods may not be possible; iv. Extra payment to be made for work on Saturday and Sundays and holidays; v. Generator and other services charges are required to be taken into account. vi. The office and record-keeping equipment necessary for successful warehousing operations has to be budgeted for; vii. To this must be added the cost of such item as fuel, air-conditioning, power and light. viii. The cost of maintaining insurance records and of the premiums paid for fire, theft, and also for workmen’s compensation.

The advantages and disadvantages of private warehousing as against those of public warehousing are: a. Private warehousing offers better control over the movement and storage of products as required by the management from time to time. b. There is less likelihood of error in the case of private warehousing since the company’s products are handled by its own employees who are able to identify the products of their own company better. c. If there is sufficient volume of goods to be warehoused, the costs of private warehousing compares favourably with that...
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