What’s the definition of warehousing and warehouse?
Well, I asked Colin Airdrie one of our warehousing experts, exactly that question! I hope his answer helps you.
A good definition of a warehouse is “a planned space for the efficient storage and handling of goods and materials”. In that sense, we can use the words “warehouse” and“distribution centre” interchangeably. What’s important to note in the definition is the use of the words “planned” and“efficient”.
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This means going further than what some companies still do, which is limited to having a “place” where they put “stuff”, without the planning and therefore losing out on the efficiency.
With goods and materials coming in and going out, the warehouse is also a vital hub in the centre of the supply chain.
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 show a very profitable return on investment, more 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.
How does a warehouse contribute to making a company profitable?
There are at least three ways.
- The first is to allow for the creation of buffer stocks to smooth out fluctuations in supply and demand, which is essential for maintaining good customer service. Happy customers bring repeat business with lower costs and more profit.
- The second is in building up investment stocks; examples are commodities like coffee, where prices fluctuate on a global scale, and stock can be held to be sold when the price is most 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.