Warehousing SS2 Marketing Lesson Note

Warehousing is the process of storing physical inventory for sale or distribution. Warehouses are used by all different types of businesses that need to temporarily store products in bulk before either shipping them to other locations or individually to end consumers.

FUNCTIONS OF WAREHOUSING

1. Storage: Surplus commodities which are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers.

2. Price Stabilization: Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. Fall in the prices of goods when their supply is in abundance and a rise in their prices during the slack season are avoided.

3. Risk bearing: When the goods are not stored in warehouses they are exposed to many risks in the form of theft, deterioration, exploration, fire etc. Warehouses are constructed in such a way as to minimize these risks.

4. Financing: Loans can be raised from the warehouse keeper against the goods stored by the owner. Goods act as security for the warehouse keeper. Similarly, banks and other financial institutions also advance loans against warehouse receipts. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations.

5. Grading and Packing:

Warehouses nowadays provide the facilities for packing, processing and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner.

TYPES OF WAREHOUSING

There are two types of warehousing:    

1. Storage Warehousing: This is the storage of goods/products for a moderate/long period in an attempt to balance the demands and supply of manufacturers and consumers.

Importance Of Storage Warehousing

1. It helps to lessen the transportation expenses of manufacturers.
2. They have heavy machinery such as cranes, forklifts etc that can be used to load and unload cargo

They serve as depots for merchandise or other parts for manufacturing companies.

2. Distribution Warehousing: This is the storage of goods/products for a short period.

Importance Of Distribution Warehousing

1. It facilitates the assembling and redistribution of products within a short period
2. They can be centralized (when located near the factory) or decentralized (when located near the market).
3. . It has the flexibility to warehouse goods that are redistributed to wholesalers, retailers and/or directly to customers simultaneously.

ACTIVITIES OF WAREHOUSES

i. Receiving: Receiving is the first warehouse process and one of the most crucial. To perform the receiving process properly, the warehouse should be able to verify that it has received the right product, in the right quantity, in the right condition, and at the right time. Failing to do so will have consequent impacts on all subsequent operations.

Receiving also involves the transfer of responsibility for the goods to the warehouse. This places accountability on the warehouse for maintaining the condition of the goods until they are shipped. Properly receiving cargo will allow you to filter out damaged goods and avoid liability for them.

ii. Put-Away: Put-away is the second warehouse process and is the movement of goods from the receiving dock to the most optimal warehouse storage location. Failing to place goods in their ideal location can impair the productivity of warehouse operations. When goods are put away properly, there are several benefits:

• Cargo is stored faster and more efficiently.
• Travel time is minimized.
• . Safety of goods and employees is ensured.
• Warehouse space utilization is maximized.
• Cargo is easier and faster to find, track, and retrieve.

iii. Storage: Storage is the warehouse process in which goods are placed into their most appropriate storage space. When done properly, the storage process fully maximizes the available space in your warehouse and increases labour efficiency.

iv. Picking: Picking is the warehouse process that collects products in a warehouse to fulfil customer orders. Since it is the costliest process in the warehouse, comprising as much as 55% of the total operating expense, optimizing this process will allow you to reduce costs significantly and increase your warehouse efficiency. Streamlining this process should also focus on achieving higher accuracy, as errors can have a direct impact on your customer satisfaction.

v. Packing: Packing is the warehouse process that consolidates picked items in a sales order and prepares them for shipment to the customer. One of the primary tasks of packing is to ensure that damages are minimized from the time items leave the warehouse. Additionally, packaging must be light enough so as not to increase the weight of the goods and minimal enough to control packaging costs.

vi. Shipping: Shipping is the final warehouse process and the start of the journey of goods from the warehouse to the customer. Shipping is considered successful only if the right order is sorted and loaded, is dispatched to the right customer, travels through the right transit mode, and is delivered safely and on time.

Previous processes, such as ordering, put-away, picking, and packing, are also vital to the success of shipping because they greatly affect whether the order is fulfilled accurately and safely.

TYPES OF WAREHOUSES

1. Wholesaler warehouse

Warehousing is the process of storing physical inventory for sale or distribution. Warehouses are used by all different types of businesses that need to temporarily store products in bulk before either shipping them to other locations or individually to end consumers.

FUNCTIONS OF WAREHOUSING

1. Storage: Surplus commodities which are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers.

2. Price Stabilization: Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. Fall in the prices of goods when their supply is in abundance and a rise in their prices during the slack season are avoided.

3. Risk bearing: When the goods are not stored in warehouses they are exposed to many risks in the form of theft, deterioration, exploration, fire etc. Warehouses are constructed in such a way as to minimize these risks.

4. Financing: Loans can be raised from the warehouse keeper against the goods stored by the owner. Goods act as security for the warehouse keeper. Similarly, banks and other financial institutions also advance loans against warehouse receipts. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations.

5. Grading and Packing:

Warehouses nowadays provide the facilities for packing, processing and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner.

TYPES OF WAREHOUSING

There are two types of warehousing:    

1. Storage Warehousing: This is the storage of goods/products for a moderate/long period in an attempt to balance the demands and supply of manufacturers and consumers.

Importance Of Storage Warehousing

1. It helps to lessen the transportation expenses of manufacturers.
2. They have heavy machinery such as cranes, forklifts etc that can be used to load and unload cargo

They serve as depots for merchandise or other parts for manufacturing companies.

2. Distribution Warehousing: This is the storage of goods/products for a short period.

Importance Of Distribution Warehousing

1. It facilitates the assembling and redistribution of products within a short period
2. They can be centralized (when located near the factory) or decentralized (when located near the market).

iii. It has the flexibility to warehouse goods that are redistributed to wholesalers, retailers and/or directly to customers simultaneously.

ACTIVITIES OF WAREHOUSES

1. Receiving: Receiving is the first warehouse process and one of the most crucial. To perform the receiving process properly, the warehouse should be able to verify that it has received the right product, in the right quantity, in the right condition, and at the right time. Failing to do so will have consequent impacts on all subsequent operations.

Receiving also involves the transfer of responsibility for the goods to the warehouse. This places accountability on the warehouse for maintaining the condition of the goods until they are shipped. Properly receiving cargo will allow you to filter out damaged goods and avoid liability for them.

2. Put-Away: Put-away is the second warehouse process and is the movement of goods from the receiving dock to the most optimal warehouse storage location. Failing to place goods in their ideal location can impair the productivity of warehouse operations. When goods are put away properly, there are several benefits:
3. Cargo is stored faster and more efficiently.
4. Travel time is minimized.

iii. Safety of goods and employees is ensured.

1. Warehouse space utilization is maximized.
2. Cargo is easier and faster to find, track, and retrieve.

3. Storage: Storage is the warehouse process in which goods are placed into their most appropriate storage space. When done properly, the storage process fully maximizes the available space in your warehouse and increases labour efficiency.

4. Picking: Picking is the warehouse process that collects products in a warehouse to fulfil customer orders. Since it is the costliest process in the warehouse, comprising as much as 55% of the total operating expense, optimizing this process will allow you to reduce costs significantly and increase your warehouse efficiency. Streamlining this process should also focus on achieving higher accuracy, as errors can have a direct impact on your customer satisfaction.

5. Packing: Packing is the warehouse process that consolidates picked items in a sales order and prepares them for shipment to the customer. One of the primary tasks of packing is to ensure that damages are minimized from the time items leave the warehouse. Additionally, packaging must be light enough so as not to increase the weight of the goods and minimal enough to control packaging costs.

6. Shipping: Shipping is the final warehouse process and the start of the journey of goods from the warehouse to the customer. Shipping is considered successful only if the right order is sorted and loaded, is dispatched to the right customer, travels through the right transit mode, and is delivered safely and on time.

Previous processes, such as ordering, put-away, picking, and packing, are also vital to the success of shipping because they greatly affect whether the order is fulfilled accurately and safely.

TYPES OF WAREHOUSES

1.  Wholesaler warehouse

Functions Of Wholesalers Warehouse.

• It serves as a manufacturer’s depot.
• It serves as the retailer’s pick-up point.
•  It creates job opportunities.
• It is a place for bulk buyers.
• It serves as a place where new products are launched.

2. Retailer warehouse

Functions Of Retailers Warehouse

• It ensures that products are stocked correctly and safely.
• It maintains automated storage and retrieval systems.
•  It processes orders and plans the dispatch of items to customers.
• It ensures the efficient and quality fulfilment of orders without having to deal with stockouts.

3. Bonded warehouse

Functions Of Bonded Warehouse

• Bonded warehouses let businesses store their goods closer to foreign customers for faster delivery.
• It helps in the pushing out of the payment of customs duties until the goods are released from the bonded warehouse.
• They are used for storing imported or exported goods.

Functions Of Wholesalers Warehouse.

• It serves as a manufacturer’s depot.
• It serves as the retailer’s pick-up point.
•  It creates job opportunities.
• It is a place for bulk buyers.
• It serves as a place where new products are launched.