Warehousing and logistics are closely intertwined with one another, and they’re both part of the supply chain process. But what exactly is warehousing, and how do you define a warehouse?
Well, as logistics and warehousing experts, we’re in a pretty good position to give our own definition. So if you’re new to supply chain management, or are just trying to gain a better understanding of how warehousing fits in, let’s look at the warehouse in more detail.
What’s the Definition of Warehousing and Warehouse?
A basic definition of a warehouse is a planned space for the efficient storage and handling of goods and materials, whilst warehousing is the process of storing and handling said goods. In that sense, we can use the words “warehouse” and “distribution centre” interchangeably, though a distribution centre will typically be more advanced.
What’s important to note in our definition is the use of the words “planned” and “efficient”. This means going further than some companies still do, which is to have a “place” where they put “stuff”, without the planning and therefore losing out on the efficiency (and as a definition of warehouse, a place where you put stuff just doesn’t cut it, although it is technically accurate).
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 deliver a more profitable return on investment than many people realise. Some goods move slowly. Others may move very quickly, but they all have to move. The different goods have to be planned, laid out, and handled according to how they are expected to move through the system.
What You Do in a Warehouse Facility
The most common misconception of a warehouse is that it’s used solely for storage. Whilst storage is one of the main uses of a warehouse, it’s also where you receive the goods in the first place, as well as pack them ready to then be shipped out to another location.
When you consider these different uses of a warehouse, the supply chain management process becomes a little more complex.
There are also various types of warehouse to consider too, like public warehouses (owned by government or a 3PL company), private warehouses (owned by the company itself), and bonded warehouses (specifically for customs and international trade), though the purpose remains the same.
We’re also seeing a rise in what’s known as smart warehouses, which take advantage of advanced technology like AI to make processes simpler. In fairness, modern warehouses have been using an advanced Warehouse Management System that’s designed to optimise warehouse functionality for decades already.
A good example of this would be that many Warehouse Management Systems will have a specific module that allows you to position your stock in the best position for your picks (known as product slotting), which gives you greater control over your inventory.
And when you add in that some of these storage facilities are also used for inventory management, customer service, and more advanced warehouse operations, a warehouse is often much more than just a place to store goods (though distribution centre is also used for facilities that provide more than just storage).
The Warehouse Contribution to Companies’ Profits
There are at least three ways in which the warehouse can contribute to profitability.
The first is to house buffer inventory to smooth out fluctuations in supply and demand. This is essential for companies to maintain good customer service. Happy customers bring repeat business with lower costs and more profit.
The second is in building up investment stocks. Examples include commodities like coffee, where prices fluctuate on a global scale, and stock can be held to be sold when the price is favourable.
When inventory is accumulated like this on a large scale, it’s usually held in a specialised storage warehouse, rather than in a distribution centre.
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.
These are the most important reasons for companies to utilise fulfilment warehouses or “distribution centres,” but there are also a few specialist warehouse types which you might come across in some supply chain operations.
The Most Common Questions about Warehousing Answered
Are warehouses mainly used for storage?
Yes, warehouses are mainly used as storage solutions. In certain industries, storage warehouses are also used solely for this purpose (though as we’ve covered, most warehouses are used for more than just storage).
Unlike the fulfilment warehouse, storage warehouses typically host no value-adding activities, and as the name suggests, are used solely to store inventory, often for long periods of time.
And in addition to storage-only and distribution centre warehouses, some companies may also have production warehouses, which are used purely to even out the flow of inbound materials in manufacturing.
In a storage warehouse, inventory will occasionally be received in bulk and put away, eventually to be dispatched (probably in bulk also) to more dynamic warehouse facilities to enter the supply chain proper.
In a production warehouse — you guessed it — the products will be prepared ready for shipping. It all depends on the company and the goods being transported, as sometimes it makes sense to have multiple warehouses for different tasks.
What are the benefits of warehousing?
Hopefully we’ve covered most of this in our article, but there’s a long list of benefits of warehousing that we could mention.
This includes storing goods, reducing spend (like transportation costs), giving you greater control over inventory, allowing for more efficient order fulfilment, specialised storage for some goods (like frozen foods), and many more.
Warehousing: A Supply Chain Necessity
In a perfect supply chain, warehouses would have no place. As yet, though, the perfect supply chain doesn’t exist, so warehousing is essential to maintain an efficient, uninterrupted flow of materials and goods from source to point-of-use.
Because it’s such a critical activity, warehousing knowledge is essential for anyone involved in supply chain operations or management.
This article provides an excellent introduction to the basics, but if you’d like to learn more about warehousing, keep visiting our blog here at Logistics Bureau, as we regularly post articles on the topic — and for professional warehouse consultant assistance, feel free to get in touch for a free consult on your logistics operations.
Hi
Myself Andrew from INDIA would like to set up office here or can I be a part of your organisation.
No plans to open in India. Sorry.
Any plans to open in Ghana, Africa?
Any plan to open in Nigeria, I would like to work with you.
No plans for Nigeria. Sorry.
Im intending to start a warehousing storage business in South Africa, any positive advise on management of such business
A warehousing business is very competitive and so profit margins can be quite low.
You need to differentiate your services in some way.
How will your services be better than others?
Will you specialise in specific industries or products?
Try to provide ‘value adding’ services rather than just basic warehousing services.
Any plans to open in Yangon, MYANMAR.
Not right now. But if we could link up with the right local partners we might consider it.
Do you have here in Dubai, a warehouse storage facility?
No, Sorry. We provide management consulting services and education programs.
Hello , Any plans of opening up in Pakistan ? There is huge potential with the Pakistan China , CPEC/One belt one road initiative. Would be a great prospect.
No plans at this stage, sorry.
i want the notes of warehousing in certificate supply chain and management
You’ll find plenty of that information on this Blog.
Can I get notice for warehouse module 2 in supply chain management
Warehouse is a reserve in which raw materials or manufactured goods may be stored prior to their distribution for sale. Giraffe Storage Solutions which is a Drive in Rack Supplier,pallet storage system in India,Drive in Rack Manufacturer,drive in rack manufacturers India owns a warehouse of its own which is the leading manufacturer in central India.
Hi,
Any plans in India
Not at the moment, but who knows in the future. I must get over to India again soon. Love the country and people. And the food of course!
Pls, I will be so glad receiving time to time newsletters & bulletins from ur end. Thank u.
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Hello, I had a telephone I interview and I was asked about ” deadzone ” are .I was in aware of the phrase. Are you able to enlighten me ?
Never heard of it sorry. But be just a local term they use.
Can you please let me know in which field there is better chance of bright career
1.Warehousing
2.Import export skills
Both are good.
Any plans in Kenya…I did procurement
Not at this stage, sorry.
I wish I could help. I always suggest getting involved in your local Logistics / Supply Chain Association.
i would like to be part of your subscription list
Just subscribe on the page
Any plan to set up office or agency in India.
No, sorry. But we do provide consulting services all over the World without the need for a physical office in the clients country.
is it okay to open the finished goods to get a sample? and who is allowed to open it? hope you’ll answer this question, thankyou
No it’s not OK LOL. Otherwise there will be half empty packs all over the warehouse! Normally there are samples specifically made available to Sales staff. Depending on the size of the company someone senior may need to approve taking samples, as basically you are ‘writing off’ stock and that has a financial implication.
Am a student studying logistics and Transportation Management am still to specialise Which to know which field is more good to specialise on since logistics is too vast please hope you help.
Follow what interests you!
Good idear we need it here in nigeria
Thanks. I hope it will.
hi liked ur explanation. would like to work under you. studying supply chain in canada
Glad you enjoy the blogs. Sadly we don’t have offices in Canada.
Thanks enjoyed your site, we don’t have any office in Taraba state, inside Nigeria
I want to work with
contact me in Facebook, Orimus M Godwin
I’m sorry but we have no plans to open in Nigeria.
Thanks for the articles, very insightful!
I am working on messed up inventory in my warehouse (material & sparepart). Deadstocks here and there. Do you mind to give some advice to prevent the excess of inventory?
Thank you
(1) Better forecasting
(2) Better usage tracking
(3) Better inventory accuracy