Warehousing – Types, Functions and Characteristics


A warehouse is a commercial building used for storage of goods while warehousing is the process of proper storage and handling of goods and cargo using scientific methods in the warehouse and making them available conveniently when needed. In today’s scenario, warehousing is considered as one of the most important aspect of trade.

Need for warehousing

  • Some commodities are produced in a particular season only. To ensure their off-season availability, warehousing is needed.
  • Some products are produced throughout the year but their demand is seasonal. Warehousing is important in such cases.
  • For the companies which opt for large scale production and bulk supply, warehouse is an unavoidable factor.
  • Warehousing help companies ensure quick supply of goods in demand.
  • Production of goods and their movement of goods are important for the companies for continuous production of goods.
  • Warehousing is also important for price stabilization. For necessary goods, the Government stores them in the warehouses and control its supply in the market as per the price fluctuations.
  • Another important need of warehousing is for bulk breaking. Consider a trade agent who imports goods from a country for a large number of buyers in his own country. He first takes the goods to his warehouse and break it into small parts for supply to the buyers.
  • When it comes to cost saving, warehousing helps the traders with cross docking. All the goods are consolidated in the warehouse and then stuffed into containers as per their destination. This is especially beneficial for small traders who export low quantity of goods.

Major functions of a warehouse

  • Storage of goods
  • Protection of goods
  • Risk bearing
  • Financing
  • Processing
  • Grading and branding
  • Transportation

Types of warehouses

  1. Private Warehouses
    These are owned by the manufacturers or traders/distributors. Private warehouses are used to store exclusively owned goods. These are usually preferred by farmers near their fields, wholesalers/distributors/retailers near their territory, manufacturers near their factories, exporters/importers near ports.
    Private warehouses offer better control over movement and storage of goods and less chances of error. Along with this, product specific storage techniques can be opted in private warehouses. On the other hand, higher operation costs and inflexibility in storing different products are the major disadvantages of private warehouses
  2. Public Warehouses
    These warehouses are meant for use by general public. Anyone can store their goods in public warehouses for a nominal rent. These warehouses can be private or state owned. In case a private company wants to start a public warehouse, it has to compulsorily obtain a license from the government. Besides this, the operations of these warehouses are also regulated by government agencies.
    These warehouses are less expensive and more cost effective. They are flexible enough to store different kinds of products. Public warehouses offer better utilization of money as the user pays only for the space occupied. But public warehouses are not considered goods when it comes to such goods which require special handling techniques. Also the chances of error are more here due to common storage of all goods.
  3. Government warehouses
    The government warehouses are owned, managed and governed by Central or State government. They can be used by both private companies and government agencies for storage of goods. They are thus also considered a form of public warehouses owned by government.
    Government warehouses offer better security and safety of goods due to high involvement of government. They are very less expensive but require considerable paper work to be done.

Characteristics of an ideal warehouse

  • It should be conveniently located near highways, railway stations, air ports, sea ports etc. for loading and unloading of goods.
  • Mechanical appliances should be there to lift, load and unload goods.
  • It should be spacious enough.
  • Food storage warehouses should have enough facilities to prevent food from perishing.
  • Proper arrangement to save goods from sunlight, dust, rain, moisture and pests should be available.
  • Sufficient parking space should be there to facilitate quick and easy loading and unloading of goods.
  • Security arrangements should be strict and round the clock.
  • Modern and tested firefighting equipment should be installed in the premises.


Source by Amit Wadhwani

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