Unit 11: Warehousing

Warehousing is simply the storage of goods. Normally, warehouses are large buildings equipped
with docks used to load and unload vehicles containing large quantities of goods and materials.

Functions of warehousing

1. Protect and preserve goods from getting damaged or spoiled.

2. Helps to store goods in a safe place until they are needed

3. Some goods require a specific condition of preservation and there are warehoused which are
equipped to preserve these goods. For instance, there are warehouses which are refrigerated and
which are used to store fruits and vegetables.

Types of Warehousing

There are several types of warehouses and they can be classified in terms of private and public
warehouses.

Private warehouses

These warehouses are used by manufacturers and retailers. They are built, owned and managed
by the company owners themselves. There are several types of private warehouses which are as
follows:

1. Manufacturer`s warehouse

This type of warehouse is normally located near a company`s production facility, that is, it is
located near to the factory where the goods are being produced.
2. Regional Distribution Centres

This type of warehouse is used mainly by large scale retailers such as supermarkets. They are
normally located in a central place so that they are easily accessible, convenient and cheap to
transport goods to the retail outlets.

3. Retail warehouses

These warehouses are normally used by small scale retailers such as independent retailers where
they store the little good that they sell.

4. Giant Barns

These warehouses are used by farmers to store their seeds and farming materials. They are
usually located near their fields.

Public Warehouses

These warehouses are normally built and managed by specialist organisations to offer to
organisations and individuals warehousing facilities in exchange for rent payments. This is a
cheaper alternative to building a private warehouse. There are several types of public warehouses
which are as follows:

1. Bonded warehouses

These types of warehouses are used to store goods which companies have imported and they
have to pay an import duty which is a form of tax. Bonded warehouses are normally found near
ports. In order to release goods from a bonded warehouse, there is a 3-step procedure which
needs to be followed which is elaborated below:

- Customs warrant
Once duty/tax has been paid, customs officials will authorize the warehouse to release the
goods
- Memorandum
It shows clearly what duty/tax has been paid on the released goods
 - Warehouse keeper`s order
It is an instruction given to warehouse managers to release goods because duty has been
paid.

2. Cold-Storage warehouses

This is simply a warehouse where a great deal of fresh and processed foods has been kept in cool
and freezing conditions so that it can remain in good and consumable state for longer periods of
time.

3. Cash and carry warehouses

These types of warehouse help small retailers to compete with large retailers by offering goods at
the lowest price possible. They can do this as they do not send out sales people to collect orders
and deliver goods. This means that they reduce their running cost. Therefore, it is the retailer
who needs to visit the cash and carry warehouse, choose the goods, put it in trolleys and pay for
it.