Explain the Types of Warehouses


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Warehouse options (Types of Warehouses)
 
The decision on which type of warehouse to select will depend on various financial and non-financial factors. Financial factors include Operational Cost (cost: of, running the warehouse) and Capital cost (cost of setting up the warehouse). Non-financial factors include control, customer service, expertise and perceived risks.
1.      Private Warehouse: A private warehouse is operated by the firm owning the product. The facility (land and building) could be either owned or leased. It is recommended to go in for a private warehouse when the utilization of the warehouse is expected to be high so that the unit cost of warehousing would be low. The advantages of having a private warehouse are that the company can design the warehouse to suit its specific requirements. Also the company has a great deal of control and flexibility on the warehouse operations. The company can claim depreciation on the flexibility asset and if there is excess space the company can look at renting the space out to get some extra revenue. But the capital cost of a private warehouse is very high. Due to which the funds of the company could get blocked (which could be used for other profitable use). Also the operating cost per unit of goods would be high if not utilized properly.

EXAMPLE
 
Cadbury India Ltd takes utmost care of the storage of the raw materials. They have different provisions for storing different kinds of materials. Cadbury follows a systematic way of storing and distributing its finished goods. In all, Cadbury has 27 warehouses in India in which 17 are the major warehouses and 10 are minors. Thus it has one warehouse in every state called as the carry and forwarding agents.
The Thane plant is an important plant for Cadbury, producing some of the important Cadbury products. As a result it has been provided with a large warehousing facility of around 37,500 sq. Ft. This facility is a two-storyed warehouse wherein the heavy materials are stored at the ground floor and lightweight materials are stored at the first floor.

2.      Public Warehouse: If an enterprise does not want to own a warehouse, it can go for public warehouse. These are warehouses whose facility can be hired by anyone. It gives marketing flexibility as the company can change the location and size depending on the market demand. As a public warehouse caters to many clients, economies of scale could be achieved which could reduce cost. Public warehouse are into the business of providing warehouse operations and hence provide expertise in the field. The different types of public warehouses are general merchandise, refrigerated, special commodity (special handling), bonded and household goods. Bonded warehouses are used to store goods before the tax are paid and is uses extensively in international business during exports and imports.

EXAMPLE
Central Warehousing Corporation (CWC) was established as a model for scientific warehousing in the country to undertake storage and distribution of the agricultural produces. It has a chain of Public warehouses with over 458 warehouses of 69.75 lakh metric tonnes capacity being managed by 15 regional offices. The warehouses of CWC provide storage and ancillary services for more than 250 groups of commodities and products and many of which call for specialized arrangements and a high degree of professional care and skill.

3.      Contract Warehouse: There is a long-term contract signed between the company and a party providing warehousing services. The long-term contract could help in lowering the cost. Apart from providing lower cost (cost divided over number of clients), it provides for expertise in warehousing and flexibility. Normally contract warehouse also provide for additional services such as transportation, order processing, customer service, etc.

4.      Co-operative Warehouses: These warehouses are owned, managed and controlled by co­operative societies. They provide warehousing facilities at the most economical rates to the members of their society.


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