Types of Warehouses

1. Private warehouses.

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;

1. 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.
2. 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.
3. Retailer’s warehouse- they are owned and operated by large scale retailers to store their bulk purchases from manufacturers/wholesalers.

Advantages of private warehouses
1. Allow the manufacturer or the owner to exercise some degree of control over its operations.
2. 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.
3. The owner designs the warehouse using his own specification to suit his needs.
4. The owner is not tied down by procedures of receiving and issuing goods like in public warehouses.
5. The goods can stay in the store for as long as needed without causing the owner worries regarding high storage charges.
6. 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.
7. 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
1. The initial cost of construction of a warehouse is very high.
2. Private operator meets all the operating costs e.g. labor, electricity, security etc.
3. Private warehouses operators may not afford to employ qualified management personnel to deal with management issues.
4. Under-utilization of personnel/employees and facilities may occur especially in times of low volumes.

2. PUBLIC WAREHOUSES.

They are owned by individuals for purpose of renting space to those who need it for storage of their goods. They are conveniently situated near terminals eg seaports an airport, railway station etc. It facilitates movement of goods in and out of warehouse and mostly used by importers and exporters. There are services offered to the goods stored in this warehouses e.g. grading, packaging, preparing export samples etc. The goods are also insured against loss/damage as a result of fire. Goods can be sold while still here and the new owner don’t have to move the goods.
Advantages of public warehouses
1. They are an investment opportunity for their owners.
2. Acts as a source of employment.
3. Goods stored here can be sold without their physical movement from the warehouse.
4. Traders don’t have to construct warehouse since they can rent space to store their goods.
5. Goods are insured against risks e.g. fire and theft.
6. A trader may get a short term loan from the warehousing firm by using the goods as security.
7. It is in general less expensive- Fixed costs of a warehouse are distributed among many users. Therefore, the overall cost of warehousing per unit works out to a lower figure.
8. They are usually strategically positioned and easily available.
9. Adequately flexible to meet most space requirements, for several plans are available to suit the requirements of different users
10. The costs of public warehousing can be easily and exactly ascertained, and the user pays only for the space and services he uses.
11. Enough space to handle peak requirements.

Disadvantages of public warehouses

1. Storage charges levied by the public warehouse operations are relatively high.
2. The hirer might get poor services or miss space during peak seasons due to the stiff competition for the same facilities.
3. The process of receipt and issuance of goods may be long and complicated due to the large number of clients.
4. The hirer does not have complete authority over his own goods.
5. Damage/loss of goods may occur since the owner is not there to supervise them.
6. They are Unevenly distributed.
7. One is required to pay other charges if you extend your storage time.

3. BONDED WAREHOUSE

• It is a public warehouse that is used to store dutiable goods (refers to goods on which tax must be paid before they are released)
• The goods may be locally made or imported
• The tax charge on local made goods is called excise duty.
• The tax charged on locally made goods is called customs duty.
• If the goods are sold when there are still in warehouse the new owner of the goods pays both storage charges and the duty’s before clearing the goods from the warehouse.
• When an importer pays the duty to the customs officials, a release warrant document is issued.
• This document enables the trader to have his goods released from the warehouse.

Features of bonded warehouses

1. Goods will be bounded in the warehouse until the duty is paid.
2. Goods can be re-exported when still in the warehouse.
3. Storage costs are charged on all the goods stored in the warehouse.
4. Goods can still be sold when they are under bond.
5. Goods are released only on production of a release warrant.

Advantages of bonded warehouses

I. To trader/importer.

1. The warehouse gives the importer time to raise money to pay the duties.
2. The importer/trader can still sell the goods when they are in the warehouse therefore he is relieved from paying storage charges and duties.
3. Some goods lose weight after sometime therefore the trader pays less duties if it is based on the weight of the goods.
4. Goods can still be prepared when they are in the warehouse.

II. To the government.

1. It is a source of revenue to the government.
2. The government is able to control entry of harmful products and illegal goods.
3. It is able to check the quality and quantity of the goods imported.
4. The government is able to verify documents for goods in transit.
5. The government is able to inspect the nature of the goods imported.

Disadvantages of bonded warehouses

1. Importers have to meet strict schedules or storage to avoid being fined by the customs department
2. Goods could be stolen/damaged while in bond.
3. Failure to raise duty and storage charges can lead to goods being auctioned.
4. Expensive compared to private and public warehouses.
5. High charges.

4. Government Warehouses

These warehouses are owned, managed and controlled by central or state governments or public corporations or local authorities. Both government and private enterprises may use these warehouses to store their goods. Central Warehousing Corporation of India, State Warehousing Corporation and Food Corporation of India are examples of agencies maintaining government warehouses.

5. Co-operative Warehouses

These warehouses are owned, managed and controlled by co-operative societies. They provide warehousing facilities at the most economical rates to the members of their society.

6. 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
7. Departmental warehouses: This is a warehouse established to serve one department or branch. They are normally located inside the main departmental building or adjacent to it.

8. Specialized warehouses

These are warehouses used to store the items which require special attention. Examples of these items include flour, grain, fuel oil, petroleum, explosives etc. These warehouses contain special facilities used to preserve these items so that they are not spoiled/damaged. In fact the storage of explosives like fuel are governed by government regulations which must be observed.

9. Stockyard

These are open-air storage space. Buildings for housing stock are expensive and certain heavier and less perishable materials may be kept in the open for a reasonable length of time without serious deterioration. Items that can be kept in a stockyard include:- heavy steel bars, rails, metal pipes, timber, bricks, sand, concrete, metal scrap awaiting disposal. Unlike storehouse storage, open-air storage receives less attention and the following are some of the possible shortcomings that may be experienced in outside storage facilities:-

1. Stock is scattered over a wide area, making proper control very difficult
2. There is an excessive employment of manual labor
3. The absence of fencing or other means of enclosure increases the risk of theft, fraud or unauthorized issues.
4. Road and rail access is inadequate, thus slowing down transport and hindering the use of mechanical handling equipment.
5. Lack of artificial lighting impedes efficient working during the winter(cold) months and makes night work impracticable.
6. Material is mostly stacked on bare earth and in course of time becomes overgrown by vegetation or corroded.

10. Field Warehouse

Field warehouse occurs in public warehouse when a receipt is issued for goods stored there in. In such cases, the warehouseman’s receipt is usually used as collateral for loan. The receipt issued is negotiable instrument where title to the goods is transferrable. This type of service is attractive to individuals or companies who may have accumulated inventory and finding themselves in need of working capital.

11. Raw Material and Component Warehouse

This type of warehouse holds raw materials at or near the point of introduction to manufacturing or assembly process.

12. Finished goods Warehouse

It holds inventory used to buffer the variations between the production schedules and demand.

For this purpose, warehouse is usually located near the point of manufacturer and is often characterized by the flow of goods.

13. Distribution Warehouse and Distribution Centres

They accumulate and accommodate products from various points of manufacturer within a single firm or from several firms for combined shipment to common customers. Such a warehouse may be located central to other production locations or the customer base.

PHYSICAL SUPPLY SYSTEM

PHYSICAL DISTRIBUTION SYSTEM

14. Fulfilment Warehouses and Fulfilment Centres

They are warehouses used for receiving, picking and shipping in small orders for individual customers.



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