Warehouse is a large building in which goods, raw materials, or commodities are stored.
Importance of Warehouses
- Protection of goods against climatic conditions.
- Protection from theft.
- Producers can store raw material for future production.
- Surplus created can be stored before being finally sold.
- Shortages in the market can be avoided.
- Price fluctuations can be minimized.
- International trade is not possible without warehousing.
- Traders can keep their cargos in bonded warehouses, before they pay the duty.
- Plays important role when demand for products or the time of production is seasonal.
- Provides place for display of goods.
Types of Warehouses
- To store bulk purchases for wholesaler or producer.
- Goods are packed and branded in warehouses.
- Retailers can purchase goods when they are cheap and can stock excess purchase.
- So that goods are always available to fill the space on shelves.
- Use warehouses for blending, grading, packing and branding.
- Store goods from variety of manufacturers.
Cash and Cary Warehouses
- Retailers can buy in small quantities.
- Cheap because of bulk purchases, no credit facility and no delivery.
- Special warehouse with refrigerating plants.
- Perishable items can be stored.
- Temperature can be set at will.
- Insulation is done.
Regional Distribution Centers
- Owned and maintained by large scale retailers and wholesalers.
- Located close to a good road network.
- Supermarkets/multiple chains/variety chains/franchise/chain of department stores/hypermarkets mainly use regional distribution centers.
- Used to keep stock of finished goods and raw materials.
- Help producer to carry on production when there is shortage of raw material.
- Can help producer keep on production when there is less demand.
- Produced can get benefit of trade discount be purchasing raw material in bulk.
- Located in manufacturers production houses.
- These are owned by public sector (government).
- Different government agencies can stock their material.
- Also available on rent to private sector.
- Are owned by government and are under the control of custom authorities.
- Dutiable goods are stored, on which duty is not yet paid.
- Normally located on ports.
- Traders have to pay the rent.
- Grading, blending, packing, branding and sub-assembly can be done.
- Trader can also sell the cargo and the new owner has to pay the duties.
- Nothing can be taken out of warehouse without paying duty.
- Trader can pay some of the duty can get proportional amount of cargo released.
- Exporting can also be done without paying duty.
- It enables government to collect custom duties.
- Government gets information about the types of goods imported.
Difference between Bonded and Ordinary Warehouses
|Bonded Warehouses||Ordinary Warehouses|
|1.||Located near ports.||No specific location.|
|2.||Controlled by custom authority.||Controlled by the owners.|
|3.||Stores dutiable goods||Store finished goods and raw materials.|
|4.||Dutiable goods can not be removed until the duty is paid.||Free movement of goods in and out.|
|5.||Owned by government,||Owned by private sector.|