Warehouse, What is a warehouse and functions?
Warehouses have been a great source of revenue since the evolution of logistics. Companies take into consideration the absolute exploitation of this concept of warehouse. As a matter of fact every industry is supposed to have a store of goods also known as warehouse. Thanks to its evolution, it’s simpler to handle a warehouse due to automated guided equipment.
It is very important to an organization, enterprise and a business set up because it helps in the storage of goods. This also means that enterprises can sell goods that are out of season (sale season). But we will be discussing on the following.
- What is a warehouse?
- What is warehousing?
- What are the importance of warehousing?
- What are the factors that determine the location of a warehouse?
- Types of warehouses
- Definition of a warehouse
A warehouse is a confined environment, building, structure or other protested enclosure which are used for the purpose of storing goods .It can also be defined as a commercial building which is meant for the storage of goods usually in large quantity. A warehouse is different from a store in that, a warehouse is a place of storing goods in larger quantity ie a place where goods go to the from the manufacturer before going to the retailer while a store is a place where goods or items maybe routinely kept.
- Function of a warehouse
Provide relevant information concerning the condition of the goods in the warehouse.
Through this procedure, the company will always get the latest information from products that will be deliver to the consumer .This function is as a part of a company’s logistic system.
While in the context of supply chain (a supply chain is the inter-connectivity of activities starting from the manufacturer ,wholesalers ,retailers and to the final consumers.) warehouses are useful in the following ways
- Location of inventory in the warehouse
- Product sorting center
- Center for consolidation
- product assembly facilities
- What is warehousing?
Warehousing is the function of storage of goods to bridge the gap between their production and demand thus leading to time and place utility
Warehousing refers to those activities which involve the storage of goods on a large scale in a systematic and orderly manner making them available conveniently when needed. In other words, warehousing means holding or preserving goods in large quantity from the time of their purchase or production till the time they are used or sold. Warehousing is one of the important auxiliaries to trade .it creates time utility by bridging the gap the time gap between production of goods.
Objective of warehousing
The main objective of warehousing is to ensure the effective use of warehouse resources and satisfaction of consumers. It’s objective also include warehouse operation, maximizing the utilization of warehouse space, and maximizing profit. In addition to the physical control and security of the parts and product, good space utilization is another major objective .The other objective include
The accessibility and protection of items.
Warehouse and distribution facilities need to provide easy access to your inventory .The faster you can load, locate your goods in the warehouse, the faster you serve your customers and receive revenue. Having an effective inventory location system will go a long way to guarantee safety in the warehouse. For example GPS (Global Positioning System).This software helps to locate exactly where the goods are found in the warehouse which increases accessibility and also protect items in the warehouse.
Storage of goods
The main objective for most businesses to build or rent a space in a warehouse is to store their inventory. When you start up a business you can use your garage as a “warehouse” but you will need a warehouse in the long run.
Better production process
Knowing your inventory level at all times and matching to your customer’s needs can help you avoid slowdowns caused by large order. For example if you have customers who buy in large quantity during Christmas, you can create enough inventory to satisfy your customers when need be. So a warehouse is important to store up those inventories to avoid” out of stock”.
The objective of warehousing is also to avoid theft, damage and incorrect orders and missing stock that can reduce profits. This can be done by regular auditing and adding surveillance cameras, employee pass-protected doors and security alarms can help reduced theft.
The more there is warehouse space your company has, inventory you store and the people you employ, the risk at which accident will reduce at workplace. You can also insure your goods in the warehouse to guarantee safety of your inventory .You can insure against fire accident.
What are the importance of warehousing.
Basically, a warehouse is meant for storage of surplus which customers and clients don’t need them immediately. Most companies store goods in a warehouse to anticipate future demand this means they will need adequate storage for their surplus goods until their customers and client start placing orders.
Some goods are demanded seasonally like umbrellas in the rainy the production of these goods takes place throughout the year to meet the seasonal demand .so there is a need to store these goods in a warehouse to make them available at the time of need so that the prices of goods will not increase because of shortages. Warehousing reduces the violet fluctuations in prices by storing goods when their surplus exceeds demand and by releasing them when demand increases. Warehouses provide a regular supply of goods in the market. This matching supply with demand helps to stabilized prices.
Continues production requires adequate supply of raw materials. So there is a need to keep sufficient stock in a warehouse to ensure continuous production. This is because the future is uncertain and the country’s specific problems like traffic jam, poor infrastructural development like bad roads, water logging road blockage etc.It becomes necessary to have sufficient and adequate supply of raw materials store up in the warehouse.
Most companies produce in large quantity which the goods are not required for use at the moment by the customers. With the help of a warehouse, it will encourage large scale-production because there will be space to store up surplus goods. In order to benefit from economies of scale, the company produces in large quantity so that their cost will be reduced. By also buying the raw materials in bulk can also reduce the ordering cost and carrying cost.
Warehousing is the function of storing goods in order to bridge the time gap between the production of goods and demand .Thus warehousing helps to supply faster since they are well arrange .warehousing makes goods easier to be remove from the warehouse since it is organized.
What are the factors that determine the location of a warehouse?
Deciding on a warehouse location is a significant decision that impact every aspect of a business. Finding a balance between a convenient location and where the cost of renting is low ,is important. The location of your warehouse directly contributes to the efficiency of your company as well as the overall customers experience .Below are some factors that need to be consider before locating a warehouse to that it will be convenient for the customers as well as profitable for the company.
Availability of Capital.
This is the most important factor that determines the location and size of a warehouse. This factor is important because it affect the actual site of the warehouse. To establish a warehouse in a developed city is more costly than in remote areas.
This has to do with the location of the warehouse .Accessibility to roads and high ways must also be considered especially if trucking is the main mode of transportation. Also, the warehouse should not be located in a remote area where to access it will be difficult for the company and the customers as well. Transportation costs are affected by some or all of these variables.
The availability of skilled workers.
Workforce availability who are skilled are not found in all regions, especially in the rural areas where skilled workers are scarce, and the cost of having the skilled workers needs to be considered because, it has a direct influence on the company’s profit. This also means that where skilled workers are found need to be consider.
Nearness to the market & the local environment.
Any new warehouse should be as close as possible to the major suppliers, customers as well as producers. This will help reduce lead time, reduced transportation costs and enhance responsiveness .Also, the local environmental factors such as weather condition and risk of exposure to natural disaster should also be considered. Could the warehouse be exposed to landslide, earthquakes or flood?.
Size of the warehouse.
This is an obvious criterion. Your warehouse facility must be cable of accommodating your inventory and fit in the size of your company’s requirements. For all startup and new companies, it is essential to ensure that there is enough room for expansion. This will help save the usage of money and time when your company will grow.
Types of warehouses.
The type and nature of your good will determine the type of warehouse needed in your company for the storage of your goods. This is because the type of warehouse that you choose, can have an impact on your ability to fulfill orders on time and serve your customers. That is why it is important that you give a thought on which type of warehouse will be best for your company.
Below are the types of warehouses that you can select which is best for your company. We’ve outline the different types in this post.
An automated warehouse is the most efficient, fast and agile warehouse. An automated warehouse use order tracking software to receive, store and move goods. Some example of order tracking software include; Radio Frequency Identification (RFID),Bar code, enterprise resource planning , Very Small Aperture Terminal (VSAT) .An automated warehouse also uses modern equipment like forklifts, chain slings, pallet jacks and heavy lift slings to carry heavy machinery for example vacuum clamp is use in lifting reels of papers. With right wholesale distribution software, you can have less incidence of human error and the ability to ship and receive goods more efficiently.
A private warehouse is typically own by private companies or corporations that privately store goods. This warehouse is operated by the firm owning the product. It is also known as proprietary warehouse. In Cameroon, private companies that own big warehouses are MTN,DOVV,ORANGE, Brasseries du cameroun and SANTA LUCIA.A private warehouse may be built near the manufacturing. This option is great for established companies that are willing to make financial investment in the storage of their own goods.
Advantages of a private warehouse
- Private warehouse typically offers abundant benefits to fewer clients or customers which public warehouses simply can’t because if their large size and scale. There are few reasons why a private warehouse maybe more attractive than a public warehouse.
- One of the biggest advantages of a private warehouse is the high degree of control for clients. If you want to determine how best you can manage a space on your own, carefully track the internal flow of inventories, a private warehouse offers unlimited control of facilities.
- Since a private warehouses are own by private individuals, there’s efficiency in management , direct access into the warehouse which means there is less administrative work .There is also location decision which means the private individuals can decide the location site of their warehouse unlike the public warehouse.
Disadvantages of a private warehouse.
- The major drawback is that it is too costly, because of its fix size and cost. This means that in the short run, the private facilities cannot expand or contract to meet the increases or decreases in demand.
- Then second problem is to acquire the necessary capital needed to set up a warehouse .Since this kind of warehouse is solely own by private individuals, it will be difficult for them to have enough capital.
It is a warehouse that is own by the government. It is often found at the entrance or exit of each country where incoming and outgoing goods are kept waiting for custom duties to be paid. A public warehouse is a business that provides short or long term storage to companies on a month-to-month bases. The public warehouse charges customers or clients for the certain rate of goods stored, the volume of the warehouse and the type of services that the clients wish to use. Its advantages and disadvantages are as follows.
Advantages of public warehouse
1 A public warehouse does not only offer storage facilities, but it also offers other services such as inventory management, physical inventory count, and shipping functionality.
2 It is less costly because the company using the warehouse does not need to hire a warehouse staff to look after his goods or any inventory software or warehouse equipment. The public warehouse provides a complete package of a dedicated workforce, inventory control software, picking and packing facilities and charges their clients accordingly.
3 Most companies use the public warehouse for the short term, but it can often lead to a long term relationship as companies will find it convenient and familiar with public warehouse services.
Disadvantages of a public warehouse
1 Its disadvantage to the user can be; lack of specialized services: spaces specialized services needed may not be available in a specific location. Most public warehouse facility provides a local service which may not be useful for big companies who required specialized services.
2 The amount of space can be scaled up or down as need dictates. This can create problems in future where you might need extra space but none will be available since all other spaces have taken by other clients.
Coming to the end of our article, taking all these into consideration will help boost your knowledge about warehouses and better manage them. Nevertheless be rest assured that Business Leaders are here for any further questions.
We will love to hear from you in the comment box below.
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