Question

Answer the following question:
Explain the functions of warehousing.

Answer 1

Some of the functions of warehouses are:
i. Consolidation - The foremost function of a warehouse is to pool goods or raw materials from different plants and dispatch them, at the same time, to different customers in one shipment.
ii. Bulk breaking - Warehouses often receive goods or materials in bulk from production plants. These goods are then divided into smaller quantities and delivered to different customers according to their requirements.
iii. Stockpiling - Warehouses facilitate the storage of goods and raw materials that are not required for immediate sale or manufacturing.
iv. Protection of goods - Warehouses store the goods or materials in bulk and thus help in protecting them from any kind of damage such as due to wind, dust or insects.
v. Price stabilisation - In situations of varying demand and supply of goods, warehouses balance the supply and demand of goods. Thus, they help in stabilising the prices of goods in the economy.
vi. Offering value-added services - Warehouses offer various value-added services to producers such as the grading, packaging and labelling of goods.
vii. Financing - The owner of the goods and raw materials stored in a warehouse can use the warehouse receipt as a security against which he/she can borrow money from banks or other financial institutions.