Importance of Warehousing In The Supply Chain

A warehouse is generally known as a place meant for storage of large quantities of goods and their distribution. Warehousing is not simply storage of material. It covers administration of warehouse racking systems, technology and labor required to carry out essential tasks such as material storage, retrieval and value added services. It has gained critical importance in the information age, due to continuing globalization, dynamic market conditions, more demanding customers, rapidly changing customer tastes and preferences and evolution of new channels of distribution and fulfilments etc. Today, the warehousing and logistics efficiency determines the profitability and growth for marketers in many industries.  With continuously gaining importance, it makes sense for us to understand the role the warehousing plays in logistics and business operations.

  1. Customer Service

Every business aim to retain their existing customers and add more and more. Delivering products within the promised day is one of essential elements for customer satisfaction and loyalty. Keeping up with the promise requires all involved in the value chain to optimize their efficiency to prevent disruption in the supply chain. An efficient and streamlined warehouse operations reduces avoidable errors and ensures faster lead times by focusing on customer-centric services. A major contributor to this is selecting the perfect warehouse layout with an ideal pallet racking system. It enables you to deliver undamaged products within the promised date and time, and contributing to customer delight.

  1. Optimized Operations

Warehouse storage is commonly used for both production and business operations. In manufacturing, warehouses keep a balanced flow of raw materials, components, tools, equipment and any other materials necessary to meet production requirements. It also provides maintenance materials, spare parts and general stores as required. Storage rack manufacturers offer a wide range of storage solutions suitable to each business type/ process type.

With strategic location, warehouses add efficiency in the logistics value chain by positioning of products and services close to major markets and customers. It helps to accumulate and consolidate products from various points of manufacturing, or from several firms, for combined shipment to common customers. The accumulation enables the warehouse to act like the buffer to balance the supply and demand. The consolidation operations ensure that the outbound delivery costs are optimized.

  1. Economies of Scale

The important objective of warehousing is order fulfilment and customer service at the most economical manner. The most important consideration here is to maintain the warehouse stock at the lowest possible level at all times, in order to economize the working capital and to minimize the cost of warehouse storage and resources. While there is some tension generated as with more stock, it is easier to ship items more conveniently. But, this results in higher costs and inefficiency. Thus, it is necessary to establish a balance and ensure that the warehousing operations are economically managed, especially by close coordination with other functions such as sales, manufacturing and finance.

  1. Value Added Services (VAS)

New age warehouses have not only grown in size but also in scale of operations. The broad range of activities that now occur in modern warehouses go beyond shipping customer orders to provide an ever expanding array of value added services. Appropriate warehouse racking adds efficiency by consolidating products for shipment to customers and reducing transportation costs.

Key product customization activities are executed from here including order assembly, product mixing, consolidation, bulk breaking, kitting, packaging, labeling, marking, pricing, invoicing, cross docking and returns processing. It is also possible to reduce the cycle times and inventory through proper efficient warehousing operations.

  1. Value Creation

Typically, warehousing is considered as a cost-adding and non-value adding activity. But, without warehousing that business operations will collapse as it is one of the key components in logistics value chain to make products available on shelves for customers to complete the purchase transaction at the right time.

When demands are unpredictable, inventories are maintained in generic form to ensure flexibility and ship to order operations. The biggest challenge warehouses face today is to increase productivity and accuracy, reduce costs and inventory while improving customer satisfaction, which ultimately means, optimized goods rotation, less frozen capital and efficient use of warehousing resources.

In summary, warehousing is one of the most important elements of modern day business without which trade is not possible.


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