Warehousing – Types and Their Functions

A warehouse is a commercial building generally used for storage of goods and warehousing is the process of proper storage and handling of goods and cargo using scientific methods in the warehouse and making them available easily and smoothly when needed. In recent days, warehousing is considered as one of the most important aspect of trade.

Need for warehousing

• Some commodities are produced in a particular season only. To ensure their off season availability, warehousing is required.
• Some products are produced throughout the year but their demand is seasonal. Warehousing is important in such cases.
• For the companies which opt for large scale production and bulk supply, warehouse is an unavoidable factor.
• Warehousing help companies ensure quick supply of goods in demand.
• Production of goods and their movement of goods are important for the companies for continuous production of goods.
• Warehousing is also important for price stabilization. For necessary goods, the Government stores them in the warehouses and controls its supply in the market as per the price fluctuations.
• Vital need of warehousing is for bulk breaking. Consider a trade agent who imports goods from a country for a large number of buyers in his own country. He first takes the goods to his warehouse and breaks it into small parts for supply to the buyers.
• As far as cost saving is considered, warehousing helps the traders with cross docking. All the goods are consolidated in the warehouse and then stuffed into containers according their destination. This is mainly beneficial for small traders who export low quantity of goods.

Major functions of a warehouse

• Storage of goods
• Protection of goods
• Risk bearing
• Financing
• Processing
• Grading and branding
• Transportation

Types of warehouses

1. Private Warehouses

These are generally owned by the manufacturers or traders or distributors and are used to store exclusively owned goods as well as usually preferred by farmers near their fields, wholesalers or distributors or retailers near their territory, manufacturers near their factories, exporters or importers near ports. Private warehouses offer better control over movement and storage of goods and there is less chances of error. Beside these, product specific storage techniques can be opted in private warehouses.

2. Public Warehouses

These warehouses are for use by general public and anyone can store their goods in public warehouses by paying very reasonable rent. These warehouses can be either private or state owned. In case a private company wants to start a public warehouse, it has to obtain a license from the government. Moreover, the operations of these public warehouses are regulated and monitored by government agencies. These warehouses are very cost effective. They are flexible enough to store several kinds of products. Public warehouses offer better value of money as the user pays only for the space they occupy.

3. Government warehouses

The government warehouses are owned, managed and governed by Central or State government. They can be used by both private companies and government agencies for storage of goods. They are therefore also considered a form of public warehouses owned by government. Government warehouses provide better security and safety of goods as there is direct involvement of government. They are least expensive but require considerable paper work to be done.

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