Bridge Between Supply and Demand
A warehouse can be thought of as a place where goods are brought in and stored until they are needed. Thus it acts as a stopping off point and bridge between the supplier and the customer.
There are many reasons to employ a warehouse, yet for quite some time it has been thought that a warehouse provides no added value to a product. In other words, it is seen as a cost centre only. But upon closer inspection, a warehouse can provide added value services to clients. The following are some of the benefits of warehousing products.
Staging Areas
Warehouses can be designed with staging areas for goods moving through the warehouse process. Designated areas may be provided for goods awaiting storage, pick/packing, despatch and collection. These areas greatly speed up the throughput of goods; allowing a speedy delivery to customers. The warehouse staging areas can also be used to break bulk loads into smaller customer deliveries. This breaking up of large loads into smaller ones can be seen as another way of adding value to a product.
Cross-docking
In most warehouses when goods arrive from suppliers they are broken down into smaller units and placed into storage ready to pick for customer orders.
This can be seen as a bulk-breaking added value activity because it allows orders to be made available in desired quantities to customers. Although this activity does add value, it also may produce the need for an increase in labour and an increase in inventory holding time.
To decrease labour and inventory holding time there is a method used in warehousing called ‘cross-docking’. This method can be used when products arrive at a warehouse and do not need to be broken down before storage. In these situations, every effort is made to have goods ‘cross the dock’ and have them placed directly into awaiting trucks ready for despatch. So simply stated ‘cross-docking’ is seen as transferring cargo when it is received at the warehouse loading bay directly into parked outbound trucks without having to be put away or stored within the warehouse.
There is no need to hold goods in a reserve stock area or install equipment to store them. In addition, outbound trailers can serve as extensions of the warehouse as storage takes place while the trailers are being filled; thereby freeing up warehouse storage space.
Supermarket chains often handle beverages in this manner during the hot summer months.
Keeping Goods Safe and Secure
Warehouses keep goods secure and safe from fire, water damage and extremes in temperature. This prevents contamination, deterioration and the effects caused by extreme changes in the weather.
Gathering
This process allows products received from many different suppliers, both international and domestic, to be gathered and stored in enough quantities to provide customers with a full range of products to buy from. The warehouse may then offer a value-added service of picking/packing goods allowing suppliers and customers to benefit from a reduction in delivery costs by packaging goods from several suppliers together and delivered in one vehicle.
Temporary Storage
Remember that warehousing is all about storing goods temporarily. The warehouse is really only a staging area that is part of our supply chain.
There are times where goods are stored in the warehouse for long periods in order to take advantage of bulk purchasing and commodity buying. But for the most part, it only acts as a temporary place for storage. The length of time in storage and the amount stored is part of a process called inventory control.