Published by MBA Skool Team, Last Updated: January 10, 2016

What is Warehousing?

Warehousing or storage refers to the process of holding and conservation of goods till they are dispatched to the customers. There is a requirement for warehousing or storing the goods so as to make them accessible to buyers as and when required. Storage allows a company to carry out production in expectation of demand in prospect. By bridging this gap, storage produces time utility.

Warehouse is defined as the storage structure build for the defense of the quality and quantity of the stocked up produce. The requirement for a warehouse is felt when there is a time gap between the production of the product and the consumption of products.

Warehouses enable the businessmen to carry on production all through the year and sell their products, at any time there is sufficient demand. Need for warehouses occur also because some goods are fashioned only in a specific season but are asked for throughout the year. Likewise, certain products are shaped all through the year but asked for only during a specific season.

Types of Warehouses:

Private Warehouses

These warehouses are owned and controlled by big producers and merchants to complete their own storage wants.

Public Warehouses

These warehouses are a specialised business organization that provides storage amenities to the common public for a definite charge. It may be owned and operated either by an individual or a cooperative society.

Bonded Warehouses

These warehouses are approved by the Government to accept imported merchandise for storage awaiting the payment of customs duty. They are usually situated near the ports. They are either controlled by the Government or they work under the customs department.

Benefits of Warehousing

1. Warehouses ease out the stocking process of goods when their supply exceeds demand and by utilizing them when the demand is more than the immediate productions. This on one hand makes certain a habitual supply of goods in the market and on the other hand it helps to even out prices by matching the supply and demand dynamics.

2. Warehouses offer for secure custody of goods. Businessmen can thus reduce the threat to the goods from loss, injury, fire, theft etc. Consumable products can be conserved in cold storage. In addition, the goods kept in a warehouse are typically insured.

3.  A warehouse supply services for dispensation, stuffing, amalgamation, grading etc, of the goods for the function of sale. The potential buyers can examine the merchandise kept in a warehouse.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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