Meaning of Warehousing
Warehousing is a process of properly storing and handling goods in warehouses that are to be distributed or sold later. Warehouses are large commercial buildings where products are stored safely in advance. This process has an efficient role in providing a smooth and regular flow of goods or other materials and avoids any shortage like situations.
Warehouses provide a proper place for arranging and controlling all products which help in boosting productivity and reduce the overall cost. It helps businesses in fulfilling the orders of customers on time. The warehousing process creates time utility by bridging the gap between the production and consumption time period.
Apart from using the warehouse as the place of storage, it is also used for packaging and grading of products. Warehouses reduce the fluctuations in the price of the product by holding it when its supply exceeds in the market and by releasing it when its demand is more than its regular supply. There are generally 3 types of warehouses: Public warehouses, Private warehouses, and Bonded warehouses.
Need of Warehousing
Need of Warehousing can be well understood from the points given below:
- Seasonal Production: Warehouses are needed to properly store products which are produced seasonally. There are many products like agricultural products which are produced and harvested during a particular time period only. Demand for these products is throughout the year and hence storing them becomes important.
- Large scale Production: Business is able to focus more effectively on its production activities due to the presence of large warehouses. They do not need to concern about preserving and storing products that they are producing. Warehouses store all surplus goods safely till their demand arises.
- Quick Supply: Warehouses helps in providing fast delivery of all required products to customers. These are located in different parts of the country and nearby where they are consumed. It leads to a quick supply of products and avoids any delays.
- Regular Production: Business needs raw materials to continue to carry on their activities without any interruption. Warehouses provide space for storing raw materials in bulk and this way helps in regularly supplying raw materials to business.
- Seasonal Demand: Certain goods are demanded in large quantity seasonally like winter or summer clothes. These products need to be produced throughout the year to fulfill these high demands. Warehouse helps in storing and supplying these products as their demand arises.
- Packing and Processing: Warehousing in addition to storage facilities also provides packing and processing services. They perform the function of properly packing the goods, processing orders and shipping them.
Importance of Warehousing
Importance of warehousing is as follows:
- Provides Storage Space: Warehouses stores all surplus goods produced by business until their demand arises. Storing goods is the foremost and primary role played by warehouses.
- Better Inventory Management: Warehouses provides one centralized location where all goods of business are stored. It helps and makes tracking of all goods much easier so that surplus or deficiency of any product can be timely handled by the business.
- Provides Safety of Products: Goods once send by businesses to warehouses for storage are look after by warehouse owners. Warehouses provide safe custody of goods and save them from damage, fire, theft, etc.
- Facilitates Regular Production: Warehouses helps in regulating the operations of the business. It continuously supplies all required raw materials by storing and preserving them in large bulk quantities.
- Stabilizes Product Prices: Reducing the irregularities in prices of products is another advantage provided by warehouses. Warehouses stabilize the prices of the goods by ensuring optimum supply in the market. It does this by holding on goods when their supply exceeds in the market whereas releasing them as their supply is less than the demand in the market.
- Improves Customer Service: Warehouses helps in enhancing customer satisfaction and improves their shopping experience. It optimizes the product distribution process and provides fast delivery service to customers. Warehouses aim at providing guaranteed timely delivery to customers which makes them happy.