WAREHOUSING

Warehousing is the act of storing a large quantity of goods manufactured or imported into a
country till they are needed by customers. It is a place where goods are stored until they are
demanded by consumers. It ensures there is regular and steady supply of goods at all times. It
also ensures that producers or manufacturer hold stock until there is demand for them.

Types of Warehouses
Bonded warehouse: This is where goods whose custom duties have not been paid are kept
until the duties on them are paid. This warehouse is usually located at the ports. The operators
of bonded warehouse guarantee that the goods will be released on payment of the duties on
them and the authority concerned issues out warehouse warrant for them. A warrant entitles
the holder the authority of the ownership of the goods. Custom authorities have opportunity
to calculate the actual value of import duties. It facilitates foreign trade, provides security for
goods imported. Production process like branding, packaging can be done in the warehouse.

State warehouse: This is a warehouse owned and controlled and also managed by the
government of a nation. It is where contraband or smuggled goods seized by the custom
authority are stored until they are auctioned.

Public warehouse: This is the type of warehouse owned and operated by private individuals
who let them out to interested members of the public for the safe keeping of their goods. It is
usually located near the sea ports, air ports. The business men who hire the public
warehouses usually pay rents to the owners.
Private warehouse: It is also referred to as producer’s warehouse. This is a place where
producers store their products until there is demand for them. It is usually located within
factory premises to store goods produced. The producers’ warehouse makes it possible for
producers to produce ahead of demand.

Wholesale warehouse: They are owned by wholesalers who operate them for the safe
keeping of their goods. They store variety of goods. It is usually from warehouses that
wholesalers now sell in bit to retailers. This type of warehouse is usually located near
distribution or sales centres.

Co-operative warehouse: This warehouse is owned, managed and controlled by co-

operative societies. They provide warehousing services at the most economical rates to
members of their society.

Factors Usually Considered When Siting a Warehouse.

 Nearness to the market. Manufacturer or wholesalers will consider the location of the
market before they decide where to site their warehouses. Most warehouse owner will
like to site his/her warehouse close to the market.
 Operating cost. Warehouse owners also consider the cost of operating the warehouse
before he/she goes into it. In this case, the operator will ensure that the warehouse is
located where the cost of operation will not be too high for him to bear.
 Transportation. The method of transportation will also be considered. In this case, the
warehouse is located where the cost of operation will not be too high for him to bear.
  Nearness to the distribution points. It is always important to site warehouse close to
distribution points where buyers can easily reach the warehouse and make their
purchases. To ensure that goods are close to buyer for example Nigerian Bottling
Company now operate mini depot so as to make purchases easier for their customers.
 Customers buying pattern. The consumption pattern of the people in an area must be
considered before a warehouse is located in the area.
 Cost of building warehouse/availability of capital It is good to ascertain how costly or
otherwise it will be for warehouse to be constructed. The availability of business in
the area will also be taken into consideration
 Availability of labour: he would prefer to establish his warehouse in an area where he
can easily access warehouse attendants for his daily operation
 constant power supply: he would establish the warehouse where power 10nsupply is
constant to maintain the of temperature of the products in his warehouse at low Cost
 Accessibility: he would like to establish warehouse in areas with good road to that it
would be easy for his target market to convey goods in and out of the warehouse
 Telecom facilities: he would choose area with good communication network coverage
in order to interact with his customers on phone or internet
 Availability of financial institution: he would have to locate his business lose bos to
bank and insurance company to easily access them for financial transactions.
 nature of business/product: his warehousing business would prosper if it is established
close to his customers

Importance/advantages of Warehousing
1. Storage facility: It serves as a means of storing goods until they are demanded for. It
ensures that goods are kept safe from the period of production or supply, till they are needed
by the customers this is called provision of time utility.
2. Stability of price. This is because it ensures regular availability of goods at all times. This
is ensuring that unnecessary scarcities which may cause price increase are removed.
3. Production ahead of time is made possible. In this case, producers can continue with their
production even when there is no immediate demand for their product. It ensures continuity
in production.
4. Employment opportunities. Warehousing creates job opportunities for members of the
public e.g. clerks, managers, securities, etc.
5. Security provisions. It plays security role by providing strong security gadgets to ensure
safety of goods stored in them.
6. It removes seasonal problems. Since goods can be stored safely, the problem of seasonal
high demands and high price are removed.
7. It helps to ensure constant supply. Regular supply of goods is made possible through
warehousing; in this case, goods are in constant supply throughout all seasons.
8. Repackaging is made possible. The process of warehousing makes repackaging and
branding possible.
Problems/disadvantages of warehousing
1. Goods stored in warehouse are sometimes stolen by workers entrusted in the care
2. Some location of warehouse are not easily accessible by vehicle especially damaged
road network
3. Problem of stock valuation by workers who find it difficult to take accurate record of
goods in warehouse
4. Lack of qualified manpower or staff to manage the warehouse
5. Most of the goods stored in the warehouse may deteriorate leading to spoilage
Activities of warehouses
Warehouses are a basic part of any production network. Warehouses could have different
activities according to product specification, customer requirements and service levels
ordered. In general, warehouse activity consists of receiving, put away, storage, packing and
shipping.
1. Receiving: operations that involve the assignment of trucks to docks, the scheduling and
execution of unloading activities
2. Storing: material’s movement from unloading area to its designated place in inventory
3. Order Picking: the process of obtaining the right amount of the right products for a set
of customer orders. This is the main and the most labour- intensive activity of
warehouse
4. Sorting and grading: Sorting and grading of goods in the warehouse
5. Packaging and repackaging of goods on behalf of customers in the warehouse.
6. Labelling: Labelling the type of products to be stored using identification code number
or tag to differentiate goods of different customers
7. Storing: Keeping/dispatching of goods in the warehouse under protection until they are
needed.
8. Delivery: The transit time for transportation from the warehouse to the customer.
9. Ensuring that goods that make up Single order are put together, check Omission, errors
and update of order records
10. Packaging and repackaging of goods on behalf of the customers in the warehouse
11. Taking stock of goods in the warehouse regularly to known the fast and slow moving
goods