Goods in a warehouse. Image credit herald.co.zw

Goods in a warehouse. Image credit herald.co.zw

ZIMSEC O Level Commerce Notes: Warehousing : 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.

To access more topics go to the Commerce Notes page.

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