Warehouses and importance of warehousing

Warehouses

• a large building where raw materials or manufactured goods may be stored prior to their distribution for sale.
• Are used to sore goods prior to sale, use or delivery.
• They are buildings used to store goods before distribution.
• They are used to facilitate the production of goods ahead of demand.

Importance of warehousing

• Warehousing enables the storage of:
• raw materials
• finished goods
• work in progress also known as partly finished goods.
• Goods in transit.
• Goods in entrepot trade.
• Seasonal goods
• Goods prior to sale or delivery.
• They enable the even distribution of goods i.e. crops can be harvested and stored and distributed to areas where there are shortages.
• They are used to stabilise prices i.e. when there excess production the excess output is stored and used to cover outstanding demand during times of low production.
• They enable grading, packing and branding of goods.
• They enable the preservation of perishables in large cold rooms e.g. fish, vegetables, fruits and meat.
• Enables goods to improve on quality as they mature for example wines.
• Prevents shortages in the event there is a breakdown during the production process.
• They can be used as collateral during the loan application process.
• They can be used to meet unexpected increases in demands arising from: holiday demands or promotional successes or An increase in disposable incomes leading to a surge in demand.
• Meet demands at any time at different volumes.
• Protect goods from weather elements such as direct exposure to sunlight, rain or wind.
• Are used to clear the lines of production.
• Allow bulk purchases by businesses.
• Are used to store goods until duty is paid.
• Reduce risks such as theft and damage to goods.

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