Explain the functions of Warehouse?


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Distribution centers

 

A distribution center for a set of products is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products (goods) to be re-distributed to retailers, to wholesalers or directly to consumers. A distribution center is a principal part, the “order processing” element, of the entire “order fulfillment” process.

 

Distribution centers are the foundation of a “supply network” as they allow a single location to stock a vast number of products. Some organizations operate both retail distribution and direct-to-consumer out of a single facility, sharing space, equipment, labor resources and inventory as applicable. The way a typical retail distribution network operates is to have centers set up throughout a commercial market. Each center will then serve a number of stores. Large distribution centers for companies such as Wal-Mart serve 50-125 stores. Suppliers will ship truckloads of products to the distribution center. The distribution center will then store the product until needed by the retail location and ship the proper quantity.

 

Basic Functions of a Warehouse

Basic function of a warehouse are movement of goods storage of goods, and information management.

1.  Storage of Goods: One of the traditional requirements of a warehouse has been for storing goods. The warehouse provides the space required for  such storage and it is one of the important functions of a warehouse.

 

Warehouse performs two types of storage: planned and extended.

 

Planned Storage:

Storage required as planned to meet the regular customer demand is called panned storage, Every inventory in received in the warehouse requires storage for a certain period of time. The duration of storage many vary.

 

Extended Storage:

            Extended storage is an inventory in excess of normal warehouse operation. Some of the reasons for extended storage requirements are seasonality in demand, erratic demand, product conditioning, speculative purchases, discounts, etc.

 

  • To meet the erratic or seasonality in demand an additional storage of goods in terms of safety stocks could be required.
  • Some products such as food items may be stored for conditioning purposes. E.g. ripening of fruits.
  • Sometimes a firm may buy bulk quantities to avail of the discounts that are available or to purchase when the price is low. This is speculative purchases as the goods are bought at a higher quantity due to lower price or due to expectation of higher price in the future.
  • Sometimes due to promotional campaigns such as sales promotion, additional stock may be required to be kept to meet the expected higher demand for the product.

 

2.  Movement of Goods: Movement of goods consist of inbound activity (unloading of goods brought to warehouse), transfer to storage (transferring the goods from the inbound area to the storage area), order selecting (selecting the good in the storage as per order to be shipped and transferring it to shipment area) and outbound activity (checking and loading the gods for shipment).

 

3. Information Management: Keeping a track of information regarding goods that have come into the warehouse, stored and that are shipped out of the warehouse. Also any other information pertaining to the warehouse is stored. The data captured by the information system in the warehouse is then passed on to the higher management in order to take better decisions.

 

Secondary Functions of a Warehouse

4. Protection of goods- A warehouse provides protection to goods from loss or damage due to heat, dust, wind and moisture, etc. It makes special arrangements for different products according to their nature. It cuts down losses due to spoilage and wastage during storage.

 

5. Risk bearing – Warehouses take over the risks incidental to storage of goods. Once goods are handed over to the warehouse-keeper for storage, the responsibility of, these goods passes on to the warehouse-keeper. Thus, the risk of loss or damage to goods in storage is borne by the warehouse keeper. Since it is bound to return the goods in good condition, the warehouse becomes responsible for any loss, theft or damage etc., thus, it takes all precautions to prevent  any mishap.

 

6. Financing- When goods are deposited in any Warehouse, the depositor gets a receipt, which acts as a proof about the deposit of goods. The Warehouses can also issue a document in favour of the owner of the goods, which is called warehouse-keeper’s warrant. This warrant is a document of title and can be transferred by simple endorsement and delivery. So while the goods are in custody of the warehouse-keeper, the businessmen can obtain loans from banks and other financial institutions keeping this warrant as security. In some cases, warehouses also give advances of money to the depositors for a short period keeping their goods as security.

 

7. Processing – Certain Commodities are not consumed in the form they are produced. Processing is required to make them consumable. For example, paddy is polished, timber is seasoned, and fruits are ripened, etc. Sometimes warehouses also undertake these activities on behalf of the owners.

 

8. Grading and branding- On request warehouses also perform the functions of grading and branding of goods on behalf of the manufacturer, wholesaler or the importer of goods. It also provides facilities for mixing, blending and packaging of goods for the convenience of handling and sale.

 

EXAMPLE

HARYANA WAREHOUSING CORPORATION: PANIPAT

 

Haryana Warehousing Corporation was set up on November 1, 1967 under the Warehousing Corporation Act, 1962. It carries out the following functions at large:

a)      Acquire and build godowns and warehouses at such places within the State as it may, with the previous approval of the Central Warehousing Corporation.

b)      Run Warehouse’s in the State for storage of agricultural products, seeds, manures, fertilizer, agriculture implements and other notified commodities.

c)      Arrange facilities for the transport of agricultural produce, seeds, manures, fertilizers agricultural implements and notified commodities to and from warehouses.

d)      Act as an agent of the Central Warehousing or of the Govt. for the purpose of purchase, sale, storage and distribution of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities.

 

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