A good definition of a warehouse is “a planned space for the efficient storage and handling of goods and materials”.
Raw materials from suppliers or finished goods from manufacturers come into the warehouse, the information has to be available to say where these goods have to go, and they then get passed down the distribution chain to the customer.
A warehouse is a dynamic operation and can deliver a more profitable return on investment than many people realise.
Some goods move slowly. Others may move very quickly, but it all has to move. The different goods have to be planned, laid out, and handled according to how they are expected to move through the system.
There are at least three ways in which the warehouse can contribute to profitability.
The first is to house buffer inventory to smooth out fluctuations in supply and demand. This is essential for companies to maintain good customer service. Happy customers bring repeat business with lower costs and more profit.
The second is in building up investment stocks. Examples include commodities like coffee, where prices fluctuate on a global scale, and stock can be held to be sold when the price is favourable.
Thirdly, inside the organisation a warehouse assists in the most effective use of capital and labour within the manufacturing and supply units. It helps keep overtime charges down and allows a company to buy and stock more supplies when prices from the supplier are more favourable.These are the most important reasons for companies to utilise fulfillment warehouses or “distribution centers,”
For a warehouse to be an ideal warehouse it should possess the following characteristics:
The location of the warehouse should be convenient: near highways, roads, railway stations, airports and sea ports so that goods can be loaded and unloaded easily.
Mechanical appliances for loading and unloading should be in place to reduce wastage due to handling and to avoid additional handling costs.
Space inside the building should be adequate so that goods can be kept properly.
Warehouses meant for preservation of perishable items like fruits, vegetables, eggs
and butter etc.should have cold storage facilities.
There should be proper arrangements to protect the goods from sunlight, rain, moisture and pests. The building should also be fitted with the latest fire fighting equipment.
The major differences between public and private warehouses are as follows:
Private warehouses are owned by companies to store their goods where as public warehouses are leased to companies for storage of goods.
Private warehouses are appropriate for firms having demands for goods at specific locations, where as public warehouses are useful for those firms that require specific inventory to be maintained at specific locations.
Private ware houses involve a fixed cost where as for public warehouses the cost is variable as they are availed as and when needed.
Explain the meaning of Distribution Centers.
Distribution Centers refers to facilities that are smaller than a firm’s main warehouse and is used for the receipt, temporary storage, and redistribution of goods according to the customer orders or to bw o be redistributed to retailers, to wholesalers,as the orders are received. They are also called branch warehouse or distribution warehouse.
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