Question

Explain in detail the warehousing services

Answer 1

Warehousing involves storing goods in a scientific and organised manner to maintain their value and quality for a longer period of time. The place where goods are stored is known as a warehouse. Warehouses not only provide storage services but also logistical services by providing the right place for the right quantity at the right time at the right cost.

The following are some of the functions performed by warehouses:

(i) Consolidation: The foremost function of a warehouse is to pool the goods or raw materials from different plants and dispatch them at the same time to different customers in one shipment. This reduces the time and cost of shipment.

(ii) Bulkbreaking: Warehouses often receive goods or materials in bulk from production plants. These bulk quantities are then divided into smaller quantities, which are later delivered to different customers according to their requirement.

(iii) Stockpiling: It is the most important function performed by a warehouse as it facilitates the storage of goods and raw material that are not required for immediate sale or manufacturing. It also ensures that the goods are protected from any spoilage or damage caused by sun, rain, pests, theft, fire, etc.

(iv) Price stabilisation: In situations of varying demand and supply of goods, warehouses help in stabilising the prices of goods. That is, in the case of excess supply, warehouses store the excess quantity. This prevents the prices from falling and helps in price stabilisation. Similarly, in times of scarcity, goods can be released from warehouses to control a rise in prices.

(v) Value-added services: Warehouses perform value-added services for producers such as grading the quality of goods, packaging and labelling, in case stored packages are opened by buyers for inspection.

(vi) Financing: The owner of the goods or raw materials stored in a warehouse can use the warehouse receipt as security for borrowing money from banks or other financial institutions.