Posted in Operations and Supply Chain Terms, Total Reads: 300
Definition: Field Warehouse
Field Warehouse is a terminology used for a building which has been rented and is being used by one company, where this building lies on the property owned by the owner of the building. A leasing agreement is agreed upon between the two parties in this arrangement. This agreement dictates the terms for the usage and the rent that is to be paid by the tenant to the owner. Field warehousing is a very beneficial arrangement, especially for the tenant, if he needs the space temporarily.
The lease agreement in the field warehouse arrangement sets a monthly, semi-annual or annual rate to be charged to the tenant company by the owner. It also includes a duration of the contract which can range from a few months to several years. In this arrangement, the owner retains the ownership of the warehouse, but allows the tenant company to use the space for its operations agreed upon in the lease agreement.
Field warehousing is cost effective alternative rather than owning and operating a facility by the company itself, especially when the need for the warehouse is temporary. A company can choose to rent the warehouse from another company for short term storage needs rather than expending money on construction. It also enables the company to save utility costs and maintenance expenses. It can rent the premises for the requisite period of time and relinquish control when its needs are fulfilled, thus saving on a large chunk of company’s financial assets.