Term
Warehousing
noun
Warehousing is known as buying goods from a manufacturer and storing them before they are shipped to another location for order fulfillment.
What Is Warehousing?
Buying goods from a manufacturer and storing them before they are shipped to another location for order fulfillment is known as warehousing. You can store the goods at any physical location like a warehouse, a spare room, or a facility. The space of storage is directly linked with the quantity and type of your products. For example, small businesses do not need a very big space and don’t have to consider transport access.
Functions of Warehousing
The core function of a warehouse is to store products before they move to another location. But warehouses can have some secondary functions to free up space inside the facility. These include:
Shipments
If warehouses are strategically placed at an important location, they can collect incoming shipments. As a shipping hub, they can store the shipments until they move to another storage facility.
Assembly Lines
If the products arrive in multiple pieces, warehouses can act as assembly lines to put them together and ship the finished pieces to retailers or customers.
Rental Storage
If sales are down or you have too big a space for your products, you can use the warehouse as a rental storage space. Another business can run their inventory from the space they rent out from your warehouse.
Packing and Grading
Some warehouses offer the service of processing, packing, and grading goods. They can pack goods in convenient sizes as per the owner’s instructions.
Financing
A business can even obtain loans from a warehouse in exchange for its products. The facility owner is covered by the goods. Some financial institutions also pass loans based on warehousing revenue.
Processing Returns
Some warehouses exist just to process returns. These facilities receive, evaluate, and process each returned product. You may even find them providing prepaid return labels, sharing refund details, and doing their best to make the returns experience as smooth as possible for customers.
Types of Warehousing
There are many types of warehousing, some of which are described below:
- Private Warehouse – is owned by a private entity for storing their own inventory or equipment.
- Public Warehouse – is owned either by the government or a semi-state entity and is available to businesses on rent to perform storage functions.
- Bonded Warehouse – is typically used to store imported goods that were denied clearance because of the failure to pay customs duty.
- Co-Operative Warehouse – is owned and run by a co-operative that allows private companies to rent space for warehousing.
- Distribution Centers – are spaces for receiving, storing, and sending shipments from point A to B.
Advantages of Warehousing
Other than the storage of products, warehouses can serve many other purposes for a business. These include:
- Improving inventory accuracy: Having a bird’s eye view of how much you have and what you shipped helps you plan for future operations accordingly.
- Reducing cost: As you become more efficient with warehouse operations, you will identify opportunities to reduce overhead costs.
- Planning duties and roles: Over time, you will get an idea of how busy the warehouse gets at all seasons to plan for staff duties and roles.
- Keeping products safe: Having a storage space that holds your products in the best way is important for a business. For example, having commercial refrigerators for perishable goods is essential for a business to maintain industry standards.
- Ideal location: When a warehouse is close to customers or manufacturers, you can plan a more efficient shipment process and reduce transit time, costs and increase business efficiency.
- Better flow of goods: Even in the ecommerce landscape, understanding the best layout of your warehouse leads to a better flow of goods from the manufacturer to the end consumer. Gradually, you’ll learn how to store goods efficiently and how to move them fast.
Elements of Warehousing
Warehousing is so much more than storing products. A warehouse can become a fulfillment center, assembly line, and so on. A few warehousing elements help with shipping, supply chain, storing, and transporting goods. They include:
- Storage systems that keep into account the maximum efficiency in storing goods.
- Climate control for goods that need a cooler or warmer environment.
- Software for inventory management that keeps track of inventory coming in and moving out of the warehouse.
- Staff that is sufficient for operations and keeps operations flowing.
- Equipment for transportation and moving to deliver the goods within and out of the warehouse.
- Security to keep the products safe at all times of the day and night.
What Is Warehouse Logistics?
The management, planning, and organization of operations within a warehouse are known as warehouse logistics. Managing a warehouse requires a lot of work, and it is a mix of managing the available space, pallets with goods, planning the shipments, and correctly handling all information.
Warehouse logistics ensure that the space runs efficiently and to the best of its abilities. The better your warehouse logistics, the happier your customers are with their orders. Keeping an eye on all affairs also helps a business drive down costs wherever possible.
What Is a Warehouse Management System?
A warehouse management system (or WMS) is software that contains tools necessary to run warehouse operations. WMS helps optimize warehousing operations, shipping, inventory and tracking, and workload distribution. Using a WMS can give you real-time insight into everything happening in your facility, helping you make smarter business decisions.
What Is the Difference Between a Warehouse and a Distribution Center?
Even though these words are often used interchangeably, warehouse and distribution centers are two different entities. All warehouses are not distribution centers, but all distribution centers are warehouses.
Warehouses are storage hubs for products, and distribution centers store and perform order fulfillment simultaneously. Business owners need to know this key difference when thinking of storage or warehousing options.
Conclusion
Warehousing is a complex process where you should manage everything efficiently. Your organizational best practices will play a big role in how you manage a warehouse. The ideal workflow implementation in your warehouse can help ensure smooth logistics that lead to positive growth in your business.