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Need, Type, Characteristics and Function of Warehouse

PCFSM 61 Comments ♥45Likes

Need, Type, Characteristics and Function of Warehouse-PCFSM

Storage involves proper arrangement for preserving goods from the time of their production or purchase till the actual use. When this storage is done on a large scale and in a specified manner it is called ‘warehousing’. The place where goods are kept is called ‘warehouse’. The person in-charge of the warehouse is called ‘warehouse-keeper’. Warehousing refers to the activities involving storage of goods on a large-scale in a systematic and orderly manner and making them available conveniently when needed. In other words, warehousing means holding or preserving goods in huge quantities from the time of their purchase or production till their actual use or sale

Need for Warehousing

Warehousing is necessary due the following reasons.

  1. Seasonal Production-

    You know that agricultural commodities are harvested during certain seasons, but their consumption or use takes place throughout the year. Therefore, there is a need for proper storage or warehousing for these commodities, from where they can be supplied as and when required.

  2. Seasonal Demand-

    There are certain goods, which are demanded seasonally, like woollen garments in winters or umbrellas in the rainy season. The production of these goods takes place throughout the year to meet the seasonal demand. 36 So there is a need to store these goods in a warehouse to make them available at the time of need.

  3. Large-scale Production –

    In case of manufactured goods, now-a-days production takes place to meet the existing as well as future demand of the products. Manufacturers also produce goods in huge quantities to enjoy the benefits of large scale production, which is more economical. So the finished products, which are produced on a large scale, need to be stored properly till they are cleared by sales.

  4. Quick Supply –

    Both industrial as well as agricultural goods are produced at some specific places but consumed throughout the country. Therefore, it is essential to stock these goods near the place of consumption, so that without making any delay these goods are made available to the consumers at the time of their need. 

  5. Continuous Production-

    Continuous production of goods in factories requires adequate supply of raw materials. So there is a need to keep sufficient quantity of stock of raw material in the warehouse to ensure continuous production. 

  6. Price Stabilization-

    To maintain a reasonable level of the price of the goods in the market there is a need to keep sufficient stock in the warehouses. Scarcity in supply of goods may increase their price in the market. Again, excess production and supply may also lead to fall in prices of the product. By maintaining a balance of supply of goods, warehousing leads to price stabilization

Types of Warehouses:-

In order to meet their requirement various types of warehouses came into existence, which may be classified as follows.

  1. A) Private Warehouses
  2. B) Public Warehouses 
  3. C) Government Warehouses 
  4. D) Bonded Warehouses 
  5. E) Co-operative Warehouses

Characteristics of Ideal Warehouses

  • Warehouse should be located at a convenient place near highways, railway stations, airports and seaports where goods can be loaded and unloaded easily

  • Mechanical appliances should be there to loading and unloading the goods. This reduces the wastages in handling and also minimizes handling costs.

  • Adequate space should be available inside the building to keep the goods in proper order Ware houses meant for preservation of perishable items like fruits, vegetables, eggs and butter etc. should have cold storage facilities.

  • Proper arrangement should be there to protect the goods from sunlight, rain, wind, dust, moisture and pests.

  • Sufficient parking space should be there inside the premises to facilitate easy and quick loading and unloading of goods.

  • Round the clock security arrangement should be there to avoid theft of goods

  • The building should be fitted with latest fire-fighting equipment’s to avoid loss of goods due to fire.

Function of Warehouse:-

  1. Storage of goods-

    The basic function of warehouses is to store large stock of goods. These goods are stored from the time of their production or purchase till their consumption or use

  2. 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.

  3. 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. 

  4. 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 warehousekeeper’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 38 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.

  5. 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.

  6. 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.

  7. Transportation-

    In some cases warehouses provide transport arrangement to the bulk depositors. It collects goods from the place of production and also sends goods to the place of delivery on request of the depositors

Author

PCFSM

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