INTRODUCTION

Warehouse is a storage structure constructed for the protection of

the quality and quantity of the stored produce. The need for a
warehouse arises due to the time gap between production and
consumption of products. Warehousing or storage refers to the
holding and preservation of goods until they are dIspatched to the
consumers. By bridging this gap, storage creates time utility. There
is a need for storing the goods so as to make them available to
buyers as and when required. Storage enables a firm to carry on
production in anticipation of demand in future. Warehouses enables
the businessmen to carry on production throughout the year and
sell their products, whenever there is adequate demand. Need for
warehouses arises also because some goods are produced only in a
particular season but are demanded throughout the year. Similarly,
certain products are produced throughout the year but demanded
only during a particular season.








Need for Warehousing
Warehousing is necessary due the following reasons.(i)
Seasonal Production-
You know that agricultural commodities are harvested
duringcertain seasons, but their consumption or use takes place
throughout the year.Therefore, there is a need for proper storage or
warehousing for these commodities,from where they can be
supplied as and when required.(ii)
Seasonal Demand-
There are certain goods, which are demanded seasonally,
likewoollen garments in winters or umbrellas in the rainy season.
The production of thesegoods takes place throughout the year to
meet the seasonal demand. So there is aneed to store these goods in
a warehouse to make them available at the time of need.

Large-scale Production -
In case of manufactured goods, now-a-days productiontakes place to
meet the existing as well as future demand of the products.
Manufacturersalso produce goods in huge quantity to enjoy the
benefits of large-scale production,which is more economical. So the
finished products, which are produced on a largescale, need to be
stored properly till they are cleared by sales.(iv)
Quick Supply -
Both industrial as well as agricultural goods are produced at
somespecific places but consumed throughout the country.
Therefore, it is essential to stock these goods near the place of
consumption, so that without making any delay thesegoods are
made available to the consumers at the time of their need.(v)
Continuous Production-
Continuous production of goods in factories requiresadequate
supply of raw materials. So there is a need to keep sufficient
quantity of stock of raw material in the warehouse to ensure
continuous production.(vi)
Price Stabilization-
To maintain a reasonable level of the price of the goods in themarket
there is a need to keep sufficient stock in the warehouses. Scarcity in
supplyof goods may increase their price in the market. Again, excess
production and supplymay also lead to fall in prices of the product.
By maintaining a balance of supply of goods, warehousing leads
to price stabilization.









FUNCTIONS OF WAREHOUSE :
1.Receiving goods:
The warehouse should receive and accept responsibility of the
goods that are delivered to it.
2. Identifying goods:
The goods that are received should be identified as per place,
label, color, code.
3. Sorting goods:
Sort out the received goods for appropriate storage area.
The goods that are going to be used mostly should be sorted
out to store at the place through where it is easily available.
4.Dispatching goods to storage:
The goods that are sorted should be dispatched for temporary
storage with easy accessibility.
5.Holding goods:
The goods that are received should be given security against
pilferage(Theft) and reduction in value, it stored in such a place that
it does not get damaged.
6.Selecting, retrieved, packing:
The items that are stored are selected, retrieved and grouped
according to customer order for dispatch.
7.Marshalling goods:
Marshaling means checking whether all the goods ordered by
customer are dispatched properly or not.
Check the items of a single order for completeness and order
records are updated.
8. Dispatching goods:
As per requirements order is packaged and directed to right
transport.
9. preparing records and advices:
The numbers of orders received, the items received and on
hand inventory, etc. are recorded for replenishment action and
stock control, and the demand and receipt data are forwarded
to control center located elsewhere.

Warehouse costs
Handling
Holding
Order Processing
Packaging
Administration
Maintenance




EXAMPLE
HARYANA WAREHOUSING CORPORATION: PANIPAT

Haryana Warehousing Corporation was set up on November 1, 1967
under the Warehousing Corporation Act, 1962. It carries out the
following functions at large:
a) Acquire and build godowns and warehouses at such places
within the State as it may, with the previous approval of the Central
Warehousing Corporation.
b) Run Warehouses in the State for storage of agricultural
products, seeds, manures, fertilizer, agriculture implements and
other notified commodities.
c) Arrange facilities for the transport of agricultural produce,
seeds, manures, fertilizers agricultural implements and notified
commodities to and from warehouses.
d) Act as an agent of the Central Warehousing or of the Govt. for
the purpose of purchase, sale, storage and distribution of
agricultural produce, seeds, manures, fertilizers, agricultural
implements and notified commodities.






BENEFITS
ECONOMIC

1. Consolidation
This helps to provide for the customer requirement of a
combination of products from different supply or
manufacturing sources. Instead of transporting the products as
small shipments from different sources, it would be more
economical to have a consolidation warehouse. This
warehouse will receive these products from various sources
and consolidate these into shipments, which are economical
for transportation or as required by the customers.

2. Break Bulk
As the name suggests, the warehouse in this case serves the
purpose of receiving bulk shipments through economical long
distance transportation and breaking of these into small
shipments for local delivery. This enables small shipments in
place of long distance small shipments.

ECONOMICS
BENEFITS
CONSOLIDATION BREAKBULK CROSS DOCK POSTPONEMENT STOCK PILING
3. Cross Docking
This type of facility enables receipt of full shipments from a
number of suppliers, generally manufacturers, and direct
distribution to different customers without storage. As soon as
the shipments are received, these are allocated to the
respective customers and are moved across to the vehicle for
the onwards shipments to the respective customers at these
facilities. Smaller shipments accompanying these full
shipments are moved to the temporary storage in these
facilities awaiting shipments to the respective customers along
with other full shipments.

6. Postponement
This Functionality of warehousing enables postponement of
commitment of products to customer until orders are received
from them. This is utilized by manufacturers or distributors for
storing products ready up to packaging stage. These products
are packaged and labeled for the particular only on receipt of
the order.

5. Stock Piling
This function of warehousing is related to seasonal
manufacturing or demand. In the case of seasonal
manufacturing, certain raw materials are available during
short periods of the year. Hence, manufacturing is possible
only during these periods of availability, while the demand is
full year around. This requires stockpiling of the products
manufactured from these raw materials. An example is mango
pulp processing. On the other hand, certain products like
woolens are required seasonally, but are produced throughout
the year, and thus need to be stockpiled as such.


SERVICE BENEFITS

8. Assortment
Assortment warehouse store a variety of products for
satisfying the variety requirements of customers. For example,
retailers may demand different brands of the same product in
small quantities rather than larger quantities of the single
brand.

4. Product Mixing
Products of different types are received from different
manufacturing plant or sources in full shipment sizes. These
products are mixed at these warehouses into right
combination for the relevant customers as per their
warehouses and continuously provided for the product
mixture shipments requiring these.
SERVICE
BENEFITS
ASSORTMENT
PRODUCT
MIXING
PRODUCTION
SUPPORT
MARKET
PRESENCE

Production support
Production support warehousing provides a continuous supply
of spare parts and materials to assembly plants. It maintains a
safety stock of items purchased from outside vendors.
Production support warehousing is used to supply processed
materials, components and subassemblies into assembly plant
in an economic and timely manner.

Market presence
As seen by marketing managers as an advantage of local
warehouse. Local warehouses and hence local inventory can be
more responsive to customers need and offer quicker delivery
than distant warehouses. Local warehouse may increase
market share and potentially increase the profitability.














Advantages of Warehousing
Warehousing offers many advantages to the business
community. Whether it is industry or trade, it provides a
number of benefits which are listed below.

i. Protection and Preservation of goods - Warehouse provides
necessary facilities to the businessmen for storing their goods
when they are not required for sale. It provides protection to
the stocks, ensures their safety and prevents wastage. It
minimises losses from breakage, deterioration in quality,
spoilage etc. Warehouses usually adopt latest technologies to
avoid losses, as far as possible.

ii. Regular flow of goods- Many commodities like rice, wheat etc.
are produced during a particular season but are consumed
throughout the year. Warehousing ensures regular supply of
such seasonal commodities throughout the year.

iii. Continuity in production- Warehouse enables the
manufacturers to carry on production continuously without
bothering about the storage of raw materials. It helps to
provide seasonal raw material without any break, for
production of finished goods.

iv. Convenient location- Warehouses are generally located at
convenient places near road, rail or waterways to facilitate
movement of goods. Convenient location reduces the cost of
transportation.

v. Easy handling- Modern warehouses are generally fitted with
mechanical appliances to handle the goods. Heavy and bulky
goods can be loaded and unloaded by using modern machines,
which reduces cost of handling such goods. Mechanical
handling also minimizes wastage during loading and
unloading.

vi. Useful for small businessmen- Construction of own warehouse
requires heavy capital investment, which small businessmen
cannot afford. In this situation, by paying a nominal amount as
rent, they can preserve their raw materials as well as finished
products in public warehouses.

vii. Creation of employment - Warehouses create employment
opportunities both for skilled and unskilled workers in every
part of the country. It is a source of income for the people, to
improve their standards of living.

viii. Facilitates sale of goods- Various steps necessary for sale of
goods such as inspection of goods by the prospective buyers,
grading, branding, packaging and labelling can be carried on by
the warehouses. Ownership of goods can be easily transferred
to the buyer by transferring the warehouse keepers warrant.

ix. Availability of finance- Loans can be easily raised from banks
and other financial institutions against the security of the
warehouse-keepers warrant. In some cases warehouses also
provide advance to the depositors of goods on keeping the
goods as security.

x. Reduces risk of loss - Goods in warehouses are well guarded
and preserved. The warehouses can economically employ
security staff to avoid theft, use insecticides for preservation
and provide cold storage facility for perishable items. They can
install fire-fighting equipment to avoid fire. The goods stored
can also be insured for compensation in case of loss.





















TYPES OF WAREHOUSES
1. Private Warehousing
2. Public Warehousing
3. Contract Warehousing
Private Warehouses
- The warehouses which are owned and managed by the
manufacturers or traders to store, exclusively, their own stock of
goods are known as private warehouses. Generally these
warehouses are constructed by the farmers near their fields, by
wholesalers and retailers near their business centres and by
manufacturersnear their factories. The design and the facilities
provided therein are according to the nature of products to be
stored.
Advantages
The advantages and disadvantages of private warehousing as
against those of public warehousing are:
a. Private warehousing offers better control over the
movement and storage of products asrequired by the
management from time to time.
b. There is less likelihood of error in the case of private
warehousing since the companys products are handled by its
own employees who are able to identify the products of their own
company better.
b. If there is sufficient volume of goods to be warehoused, the
costs of privatewarehousing compares favourably with that of
public warehousing. But privatewarehouse may not be
expected to be packed upto the brim all the while. Therefore
thecosts of private warehousing per unit may actually be
higher.

Public Warehouses -
The warehouses which are run to store goods of the general public
are known as public warehouses. Any one can store his goods in
these warehouses on payment of rent. An individual, a partnership
firm or a company mayown these warehouses. To start such
warehouses a licence from the government is required. The
government also regulates the functions and operations of these
warehouses. Mostly these warehouses are used by manufacturers,
wholesalers, exporters, importers, government agencies, etc.

Advantages
a. It is generally less expensive and more efficient.
b. Public warehouses are usually strategically located and
immediately available.
b. Public warehousing is sufficiently flexible to meet most space
requirements, for several plans are available for the
requirement of different users

d. Fixed costs of a warehouse are distributed among many users.
Therefore the overallcost of warehousing per unit works out to a
lower figure.
e. Public warehousing facilities can be given up as soon as necessary
without anyadditional liability on the part of the user.
f. The costs of public warehousing can be easily and exactly
ascertained, and the user pays only for the space and services he
use.
Contract Warehousing
Contract warehousing is a specialized form of public warehousing.
In addition to warehousing activities such warehousing provides a
combination of integrated logistics services. Thus allowing the
leasing firm to concentrate on its specialty. They provide
customized services, eg. Value Added Services
Bonded Warehouses
- These warehouses are owned, managed and controlled
bygovernment as well as private agencies. Private bonded
warehouses have to obtainlicence from the government. Bonded
warehouses are used to store imported goodsfor which import duty
is yet to be paid. Incase of imported goods the importers arenot
allowed to take away the goods from the ports till such duty is paid.
Thesewarehouses are generally owned by dock authorities and
found near the ports.



Warehouse Design Principles
While designing a warehouse the following principles should be
taken care of.

Design Criteria: There are basically three criteria for designing a
warehouse
Number of floors: Ideally there should be a single floor as more than
one floor would result in movement of goods upward and
downward from one floor to another. This would result in wastage
of time and energy. But if land is a scarce and costly then more then
one floor as storage would be justified in terms of cost.
Height utilization: As far as possible ail space should be utilized
even the vertical space as each space costs money. Height should be
utilized as much as it is safe to lift and store the material.
Product flows: Product flow should be straight. This means that
goods should enter from one door and exit from another door
ensuring that the path of entrance and exit dont cross each other.

2. Handling of material: Two principles govern material handling
technology
Movement continuity: This principle states that it is better for the
material handler to make small number of larger movements than
large number of smaller movements. For too much of exchange of
material from one hander to another handler could lead to delay as
well as spoilage of goods.
Movement scale economics : The material handler should move or
handle the largest quantity possible. This reduces per unit cost of
handling of material.

3. Storage Plan: While designing the warehouse, product
characteristics should be taken into consideration. Some of the
product considerations are as follows
Sales: Fast moving goods or the goods whose sales are high should
travel the minimum distance and should be easily accessible. This
will reduce travel distance and save time.
Weight: Relatively heavier items should be stored near the ground
level, whereas lighter items could be stored at a higher level.
Volume: Bulky material may require a open space for storage,
whereas smaller goods may require drawers or shelves.








THE NUMBER OF WAREHOUSES
The number of warehouses is another decision parameter
impacting anumber of cost variables and customer service
If customer service is taken in cost terms as cost of
customer dissatisfaction, the number of warehouses will affect
transportation,inventory, warehousing and customer dissatisfaction
costs.
The increasing number of warehousing leads to increasing
customer service levels, thus, decreasing customer dissatisfaction
cost.












LOCATION CONSIDERATION
While deciding the location following factors are to be considered
keeping potential location in mind
1. Cost of distribution from warehouse to market area
2. Availability of transportation and infrastructure.
3. Cost of transportation.
4. Presence of competition.
5. Availability and cost of utilities (power, water, gas, sewerage,
disposal
6. Availability and cost of labour.
7. Customers expectation of service level.
8. Any specific commitments made by the company to any A
category customer.
9. Local taxation levied by the local authority in the area.
10. Local residents attitude towards business from outside.
11. Restriction associated with warehouse. In some areas
some type of product are not permitted to be stored.
12. Future expansion. Whether the location is able te match
organization plan to expand in future as per their strategy.
13. Cost of loan.
14. Topography and soil condition: if the warehouse needs
special and heavy equipment for material handling and if the
incoming loads are heavy them firm soil and flat topography
are ideal. If these condition are not available , large amount of
money is required to be invested.
15. Possibility of title changes to the land : Are the title
change formalities straight forward? Eg In some situation this
is complex like title to MIDC land.
CONCLUSION
In most warehouses, change is a constantespecially when you
consider seasonal demand forecasts, supply exceptions, and
inventory flows. Distribution centers (DCs) are critical sense-and-
respond nodes within the supply chain. Warehouse management is
about mediating variability so supply flows to demand as
economically and efficiently as possible.
In today's consumer economy, however, the warehousing function
faces its own external changes. The e-commerce revolution has
upended brick-and-mortar convention as companies explore better
ways to pull product to consumersnot just retailersfaster. Retail
and wholesale channels are converging.
Technology has played a significant role, allowing companies of all
sizes greater flexibility in how they manage unique "time-to-
consumer" requirements. But companies and third-party logistics
(3PL) providers are also reconsidering distribution strategy,
infrastructure design, and warehouse processes as they lay new
foundations for future fulfillment.







WAREHOUSE SRATEGIES
There are five qualitative decision factors that are considered;
Presence synergies: presence synergies refer to marketing benefits
of having stocks located nearby the market. Customers are generally
more comfortable when suppliers maintain inventory in nearby
location. This is best served by private or contract facilities.
Industry synergies: refers to the operating benefits of co-operation
with other firms serving the same industry eg. Grocery business.
Reduced transportation cost is the major benefits here, public or
contract warehouse increases the potential of industrial synergy.
Operating flexibility: refers to the ability of internal policies and
producers to meet product and customers needs. Since private
warehouses operate the complete control of firms they are more
flexible. On other hand a public warehouse often employs policies
and procedures that are consistent across its clients to minimize
operating confusion.
Location flexibility: refers to the ability to adjust quickly to
warehouse location and number in accordingly to seasonal or
permanent demand changes. Eg. Demand for fertilizers. Public and
contract warehouses offer locations flexibility to meet such
requirements.
Scale economics: refers to the ability to reduce material handling
storage cost through use of advanced technologies. High volume
warehouse can spread technologys fixed cost over large volumes
and capital investments in mechanized equipments can reduce
direct variable cost thus achieving scale economies.