They are owned and operated by private individuals for the purpose of storing their own goods only. There are various types of private warehouses namely;
- Wholesaler’s warehouses – It stores wholesaler’s goods as they wait distribution/sale. They enable the wholesaler to buy the goods in bulk and store them until they are needed by retailers or consumers. They also display the goods; break the bulk, repack, brand, sort etc.
- Producers/manufacturers warehouses – it is a warehouse used by manufacturers to temporarily store the manufactured goods as they leave production line and are built near manufacturer’s factory.
- Retailer’s warehouse – they are owned and operated by large scale retailers to store their bulk purchases from manufacturers/wholesalers.
Advantages of private warehouses
- Allow the manufacturer or the owner to exercise some degree of control over its operations.
- Enables handling of special goods storage and protection since special facilities may be installed by the owner which may not be available in a public warehouse.
- The owner designs the warehouse using his own specification to suit his needs.
- The owner is not tied down by procedures of receiving and issuing goods like in public warehouses.
- The goods can stay in the store for as long as needed without causing the owner worries regarding high storage charges.
- There is less likelihood or error in the case of private warehousing since the company’s products are handled by its own employees who are able to identify the products of their own company.
- If there is sufficient volume of goods to be warehoused, the cost of private warehousing comparatively less than that of public warehousing
Disadvantages of private warehouses
- The initial cost of construction of a warehouse is very high.
- Private operator meets all the operating costs e.g. labor, electricity, security etc.
- Private warehouses operators may not afford to employ qualified management personnel to deal with management issues.
- Under-utilization of personnel/employees and facilities may occur especially in times of low volumes.