What’s the definition of warehousing and warehouse?
Well, I asked Colin Airdrie, one of our warehousing experts, exactly that question!
I hope his answers help you if you’re new to supply chain management, or are just trying to gain a better understanding of how warehousing fits in.
The Warehouse Defined
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”.
Check out our related warehousing pages below:
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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.
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 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.
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 (see the next section of this article), 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 fulfillment warehouses or “distribution centres,” but there are also a few specialist warehouse types which you might come across in some supply chain operations.
Specialised Warehouse Types
In addition to 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 certain industries, storage warehouses are also used.
Unlike the fulfillment warehouse, storage warehouses typically host no value-adding activities and as the name suggests, are purely used to store inventory, often for long periods of time.
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.
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 an essential for anyone involved in supply chain operations or management.
Colin’s answers in this article provide 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, along with the many other activities which make supply chain management such a fascinating profession.
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.
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
2.Import export skills
Both are good.
Any plans in Kenya…I did procurement
Not at this stage, sorry.
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?
(1) Better forecasting
(2) Better usage tracking
(3) Better inventory accuracy