Which Warehousing Option is Right for You?
Most people know that a warehouse is a place where goods are stored, or where a manufacturer places their goods for accumulation. It’s an important aspect of production and distribution of goods to the consumer. But did you know that there are different types of warehousing?
There are basically two different types of warehousing that a manufacturer or retailer can use, both of which will be discussed in this article.
What are the two basic types of warehouses?
Before understanding the different types of warehousing, it is important to know what the two basic types of warehouses actually are.
- Private warehouses: Owned and operated by the channel suppliers and manufacturers for their own activities. Usually these warehouses are owned by big manufacturers, due to the huge capital required to construct a warehouse.
- Public warehouses are owned by business establishments who provide warehousing—for a fee—to companies that do not have their own. They can also be operated by cooperatives. A public warehouse requires a license from the government to operate in accordance with the rules and regulations set out for such a business.
What is warehousing, and what are its functions?
Warehousing is more than just storage; it also includes other functions, such as receiving, identifying, holding, assembling, and packaging of products. Warehouses also assume responsibility for the goods until they have been collected.
Regardless of the type of warehousing you choose, here are the functions of warehousing;
- Storage: This is the basic function of any type of warehousing. It means simply storing surplus goods and awaiting the distribution process to the customer.
- Price stabilization: Warehousing creates time. This means that, if prices have fallen, the manufacturer can wait until they’ve stabilized to put their product back out on the market.
- Risk minimization: Most warehouses are constructed in such a way to avoid theft, damage, and deterioration to the products within. Many also have features, such as climate control and high security, to further protect products.
- Grading and packing: Many warehouses also now provide packing and grading services for products. The specifications are given by the manufacturer, and the warehouse provides these services as the goods await distribution.
- Regular production: Manufacturers can continue producing their product, even when they are unable to store the product themselves.
What is the difference between warehousing and logistics?
Warehousing and logistics are different aspects with similar functions in the supply chain. All types of warehousing involve safe storage of the goods and inventory.
Logistics, on the other hand, is a complicated process that involves the management of the entire flow of goods, from the manufacturer to the end consumer. It involves aspects such as material handling, production, packaging, warehousing, transportation, inventory, security, and flow of information.
Logistics, which can be further categorized as inbound and outbound logistics, is a critical component of supply chain management.