WAREHOUSING

Presenter:
Namla, Raihaana

This Photo by Unknown Author is licensed under C

Objectives
• To show why warehousing is important in the logistics
system.
• To identify the major types or forms of warehousing .
• To examine the primary functions of warehousing.
• To compare public and private warehousing from a financial
perspective.
Tell me what you think…
• How do you define warehousing?
Warehousing
• is defined as the part of logistics system that stores products
(raw materials, parts, goods-in-process, finished goods) at and
between points of origin and point of consumption, provides
information to management on the status, condition, and
disposition of the items being stored.
Figure 8-1. Warehousing plays a vital
role in providing a desired level of
customer service at the lowest possible
total cost.
 Nature &
Importance
Why Should a Firm Have
Inventories?
• Achieve transportation economies.
• Achieve production economies
• Take advantage of quantity purchase discounts and forward buys
• Maintain a source of supply
• Support the firm’s customer service policies
• Meet changing market conditions
• Overcome the time and space differentials that exist between producers and consumers
• Accomplish least total cost logistics commensurate with desired level of customer service
• Support the JIT programs suppliers and customers
• Provide customers with a mix of products instead of a dingle product on each order.
• Provide temporary storage of materials to be disposed of or recycled
Pull vs Push Systems
• Pull System: A pull system is a system where the production is based on actual
customer demand. In other words, the production is pulled through the system
by the customer demand. In a pull system, work is only done when there is
demand for it, and production only starts when an order is received. This
approach is often used in Lean Manufacturing and Just-In-Time (JIT)
production systems.
• Push System: A push system is a system where production is based on forecasts
and predictions of future demand. In a push system, production is started in
advance of actual demand, and products are pushed through the system to reach
the customer. This approach is often used in traditional manufacturing and
production systems.
Manufacturing Support
Product Mixing
Consolidation
Breakbulk
Tell me what you think…
• What are the particular impacts that warehousing has on an
organizations operation?
Warehousing
 Types of
Warehousing
Cross-Docking
• A warehousing strategy that involves moving products from
inbound trucks or containers directly to outbound trucks, with
little or no time spent in storage. This approach is used to
minimize handling and storage costs, reduce transportation
times, and improve inventory management. Cross-docking is
particularly useful for products that have a short shelf-life,
are in high demand, or require fast delivery to customers. By
streamlining the supply chain and minimizing inventory
levels, cross-docking can help businesses reduce costs,
improve efficiency, and enhance customer service.
Contract Warehousing
• A type of warehousing where a third-party logistics provider
(3PL) leases a warehouse space to a customer for a specific
period of time. This arrangement allows the customer to
outsource its warehousing and distribution needs to the 3PL,
while retaining control over its inventory and operations.
Contract warehousing agreements typically include a range of
services, such as inventory management, order fulfillment,
and transportation management. This approach provides
businesses with a flexible, cost-effective warehousing
solution that can be tailored to their specific needs. Contract
Public Warehouses
• G e n e r a l Wa r e h o u s i n g : T h i s t y p e o f p u b l i c w a r e h o u s e p r o v i d e s s t o r a g e s p a c e f o r a v a r i e t y o f p r o d u c t s f r o m
m u l t i p l e c l i e n t s . Ge n e r a l w a r e h o u s e s c a n b e u s e d f o r s h o r t - t e r m o r l o n g - t e r m s t o r a g e a n d t y p i c a l l y o ff e r b a s i c
services such as receiving, storing, and shipping of goods.
• R e f r i g e r a t e d Wa r e h o u s i n g : R e f r i g e r a t e d wa r e h o u s e s a r e s p e c i a l i z e d f a c i l i t i e s d e s i g n e d t o s t o r e p r o d u c t s t h a t
require temperature-controlled environments. These can include perishable foods, pharmaceuticals, and other
temperature-sensitive products.
• B o n d e d Wa r e h o u s i n g : B o n d e d wa r e h o u s e s a r e s e c u r e d f a c i l i t i e s t h a t a r e a u t h o r i z e d b y c u s t o m s a u t h o r i t i e s t o
store imported goods before they are cleared for sale or export. Bonded warehouses are often used to defer
payment of import duties and taxes, and can provide a range of services, including storage, inspection, and
repackaging.
• H o u s e h o l d Go o d s Wa r e h o u s e s : H o u s e h o l d g o o d s w a r e h o u s e s a r e s p e c i a l i z e d p u b l i c wa r e h o u s e s t h a t p r o v i d e
storage space for household items. These can include furniture, appliances, and other personal belongings.
H o u s e h o l d g o o d s w a r e h o u s e s t y p i c a l l y o ff e r s h o r t - t e r m s t o r a g e o p t i o n s f o r c u s t o m e r s w h o a r e m o v i n g o r
relocating, and may provide additional services such as packing, loading, and transportation.
• S p e c i a l C o m m o d i t y Wa r e h o u s e s : S p e c i a l c o m m o d i t y wa r e h o u s e s a r e p u b l i c wa r e h o u s e s t h a t p r o v i d e
specialized storage for specific types of goods. These can include high-value items such as art, antiques, and
j e w e l r y, a s w e l l a s p r o d u c t s t h a t r e q u i r e u n i q u e h a n d l i n g a n d s t o r a g e r e q u i r e m e n t s . S p e c i a l c o m m o d i t y
w a r e h o u s e s m a y o ff e r c l i m a t e - c o n t r o l l e d e n v i r o n m e n t s , s e c u r e s t o r a g e a r e a s , a n d o t h e r s p e c i a l i z e d s e r v i c e s t o
Functions of
Warehousing
Functions of Warehousing
1. Movement: One of the key functions of warehousing is to facilitate the movement of goods
from one location to another. This includes managing the inbound and outbound flow of
goods, as well as coordinating transportation and logistics services.

2. Storage: Warehousing provides a secure and controlled environment for the storage of goods.
This includes managing inventory levels, organizing products for easy access, and
implementing quality control measures to ensure that products are stored and handled
correctly.

3. Information Transfer: Warehousing also plays a crucial role in facilitating the transfer of
information between different stages of the supply chain. This includes tracking inventory
levels, providing real-time updates on product availability, and sharing data with other
stakeholders in the supply chain to optimize operations and improve efficiency.
 Private
Warehousing vs
Public Warehousing
Public Warehousing
Advantages Disadvantages
Conservation of Capital
Communication
Adjusts for Seasonality
Problems
Reduced Risk
Lack of Specialized
Economies of Scale
Services
Greater Flexibility
Tax Advantage Space May not be
Knows Exact Available
Warehousing Cost
Minimize Labor Disputes
Private Warehousing
Advantages Disadvantages
Degree of Control Lack of Flexibility
Less Control over the Financial Constraints
Long Term Rate of Return
Better Use of Human
Resources
Tax Benefits
Intangible Benefits
Thank you