Central warehouse

This is generally recognized as one which acts as a wholesale supplier to other units, department or sub stores. It is located in a central point to serve the whole organization i.e. its departments/branches.

 

Advantages of a central warehouse

  1. A wider range of goods is provided for all users
  2. Stock of tools, fixtures, equipment and spares can be kept to a minimum
  3. Economies in storage space are likely to be obtained
  4. The use of modern handling methods is facilitated
  5. Better purchase prices are possible because of bulk buying and delivery to a single point
  6. Inspection and testing of goods can be more effectively organized
  7. Opportunities for standardization are improved
  8. It may be possible to provide the same level of service to all customers

Disadvantages of central warehouses

  1. Extra transport costs may be involved
  2. More staff may be required
  3. If the organization is not efficient, there may be recurrent shortages at the point of usage.
  4. There is a tendency for stock investment to rise if the stock level is not strictly controlled.
  5. There is the risk of greater loss by fire.



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