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Business involves a lot of things. Buying, selling, production, warehousing, record keeping, inventory management, etc. Every stage plays a vital role in business.
Warehousing is the most compelling aspect of the business. It plays a vital role in the product life cycle and profit-making for any business. Sometimes, warehousing decides Demand and how the product flows into the market and reaches the ultimate customer.
Warehousing Facilities:
In general words, warehousing is storing goods or inventory for selling or distribution or use for manufacturing. Mostly for every business, warehousing is mandatory to store its finished product, or it may be Raw material for manufacturing or production of a new product.
Warehousing is used to store the product temporarily for further processing (like manufacturing, sale, or distribution).
Example 1: let’s say you have a manufacturing plant of water bottles. Once you make a water bottle, you need a warehouse to store the bulk of bottles for distribution, and you need a warehouse to store the raw materials required for making water bottles.
Example 2: You may have a retail shop that sells cement. You will just have a small shop that has a limited amount of stock. We will keep the entire stock in the warehouse or godown, and once we receive the order, we will send it from the warehouse.
Aspects of Warehousing or Elements of Warehousing:
Any warehouse has three major functionalities, which include inbound processing, safekeeping, and outbound processing. It may have additional functionalities like record keeping, reorganizing, climate control, etc.
1. Capacity planning:
For any business that requires a godown or warehouse, the Main aspect is space. We have to build a warehouse according to the requirements of business needs (i.e., how much stock or inventory we need to keep for future sale distribution or manufacturing purposes).
2. Inbound shipment:
Accepting inbound shipments is the Major functionality of any warehousing. Once inventory reaches the warehouse, we need to carefully arrange the shipment for further processing.
3. Tracking:
Once we have the inventory in possession, we need to keep track of the inventory because warehousing includes the In and Out process of the inventory. We need to maintain the tracking for management purposes (i.e., how much inventory we are holding is enough for sale or distribution for future purposes).
4. Climate controlling:
The major challenge in warehousing is maintaining the climatic conditions for the product based on its nature and keeping it constant. It may be cold, hot, or moderate based on the nature of the product.
5. Outbound shipment:
We need to send the inventory or product based on the sale or distribution order that we received based on the outbound method we are following (i.e., it may be FIFO, LIFO weighted average method, or any other process we are following).
6. Reorganizing:
We need to keep on organizing the warehouse based on the inbound or outbound shipments (i.e., inflow and outflow of product). We need to arrange the product based on these orders.
Different Types of Warehousing:
1. Public warehouse:
These warehouses are owned by the government and available to the public. Mostly, small businesses or businesses that need to store the product for a shorter time will use these warehouses. They are economical compared to the other warehouses and mostly useful for medium-range businesses and new businesses. Also, it is mostly useful for seasonal-based businesses because they don’t need a warehouse for the whole year except that season, so it is better to use these public warehouses for short-term purposes.
2. Private warehouse:
These are mostly owned by private players who have a business that requires large space or frequent movement of goods throughout the year. Businesses that require long-term storage or large volumes of goods will have their warehouses. Most wholesale businesses own private warehouses.
3. Smart warehouse:
Smart warehouses are not controlled by humans; instead, they are controlled by AI and robotic hands. These are the future warehouses that are entirely controlled by AI or remotely controlled. In these warehouses, everything is automated, from inbound inventory to reordering and outbound processes, and it is more accurate and absolute compared to human-managed warehouses.
4. Climate-controlled warehouse:
Temperature-controlled warehouses are mainly used for storing perishable goods and climate-sensitive goods. These are mostly cold storage facilities, and these are mainly used for agro-related products and pharma companies.
5. Bonded warehouse:
These are for people whose business mainly involves exports and imports. Businesses involved in the export and import of products have to deal with customs duties, and these clearances are delayed processes till that time to safeguard the product, the government will provide a bond to rent out safekeeping space for the product till the time it clears customs duties this is called bonded warehouse. It is very useful for companies that deal with cross-border products, which involve paying customs duties.
6. consolidated warehouse:
It acts as a bridge between small businesses that require warehousing services for lesser cost by collecting small shipments from different small businesses and making a big shipment by consolidating everything and sending it to the preferred destination. From there, it will again divide into small segments, which are received in the beginning and sent to the respective location. It is ideal for startup businesses.
Benefits/Uses of Warehousing:
Almost every business requires a warehousing facility for the sale, distribution, or manufacturing of products. These are the benefits of warehousing for every business unit
- For storage of the product till the time it is either sold, distributed, or used for manufacturing.
- Wastage reduction
- To keep the stock count.
- Safekeeping from climatic conditions or preventing theft.
- Warehousing provides an inspection facility (i.e., quality or quantity) whenever we want.
- Centralization of goods and fast movement.
- Of pest control.
- Warehouse permits repacking to speed up the process.
- It plays a vital role in extending the shelf life of perishable goods and agro-products
These days, warehousing plays a major role in the economy and is a major need for e-commerce businesses, cross-border businesses, and agriculture-related businesses. Warehousing ensures the food security of any country in the world. With proper warehousing facilities, we can extend the life of any product and use it to make profits.