The logistics industry is growing with advances in technology. Fuelled by globalisation and the booming e-commerce industry, logistics has become an ever-advancing industry. Like defence and healthcare, logistics is a crucial industry for the survival of humanity and nations. Logistics is so crucial that it is named the blood supply of the military itself. Ranging from everyday items like food and medicines to services, the logistics industry takes care of humanity and its survival.
Only in recent times, warehouses have become critical for the logistics industry. Thanks to the booming e-commerce industry and globalisation, supply chains have now become globalised and raw materials are sourced from different continents. Even the end users for businesses are from different continents and nations. It makes logistics warehouses a very specific and critical need for the survival of the logistics industry.
In this article, we will discuss the importance of warehouses in logistics companies. If you are a logistics manager or a supply chain manager, be sure to check out our Masters degree program in Logistics and Supply Chain Management. So let’s dive in.
What are warehouses?
Warehouses are simply buildings which are used for storage purposes of goods or products. These are operated by transport facilities, the logistics and supply chain industry, e-commerce companies, small businesses, and Packers and movers. A product or item is stored temporarily or for a long time in a warehouse building to simplify the supply chain.
The functions of a warehouse
1. Storage
The primary function of a warehouse is to provide storage space for businesses and bear inventory equipment or products. These are the hibernation points for goods when they are not in the sales process. It helps prevent the wastage of stock. It also helps businesses in keeping their products protected from external forces like sunlight, wind, heat, and moisture. Thanks to the warehouses, goods can be stored for a duration from their production and before purchases are made. It makes the sales process continuous.
The production on demand can be impractical for certain goods types. This makes warehouses even more critical for those sectors. Primarily there are 2 types of storage systems.
1. Planned storage
It is an extended part of the. the sales strategy of a company. Generally, company manufacturers know the customer demand before it rises and hence this product is stored at a protected waiting point before sales begin to rise.
2. Extended storage
This is a storage system when unplanned demand arises due to multiple factors: like sales spikes during seasons, promotional campaigns, and large customer demand spikes. Having a warehouse helps reduce stress on the manufacturing units by spreading the manufacturing process over a much larger period. This is in contrast with a situation where large demand arises within a short period. In such a situation, manufacturers cannot meet these demands.
2. Safety for products
The warehouse is protected from external threats. Goods in transit get lost or damaged due to extreme weather conditions. Warehouses keep them perishing by keeping them protected from moisture or sunlight. A warehouse is protected from security staff and systems as well. Cold storage facilities keep perishable goods intact. They are also protected from fire accidents with modern technology. Modern warehouses also reduce the spoilage of food and waste during storage. It is especially true with food and beverages which are susceptible to rodent and insect attacks.
3. Movement of goods
Warehouses are situated in strategic locations around the customer hubs and transportation infrastructures like airports, ports, highways, and railway stations. This makes the transportation process of goods easy, accessible, and seamless. Trucks can easily load and unload goods with the help of modern software and hardware systems. Modern logistics technology helps the movement of goods uninterrupted.
The importance of warehouses
1. Inventory control
Having a warehouse will help businesses to increase their efficiency in storing and managing their inventory. It helps business owners to store large-sized inventory and synchronise supply and demand according to their market share. With a warehouse management system, films can manage their products in real-time, track data about the list of latest orders, track shipments, print receipts, and reduce shipping time between the factory and the end user. Ready-to-serve warehouses can help businesses leverage their time and help their products reach their customers within a short time. This gives them a competitive advantage over their competition.
2. Centralisation of goods
Having a warehouse near the end user base will help companies to receive, store and distribute their products competitively. In the modern world, customers are increasingly asking for shorter and shorter delivery times. While many logistics companies are heavily investing in advertising and upgrading their technologies, having warehouses near customer hubs will help them improve their delivery times. This effectiveness and competitive advantage will help companies make a loyal consumer base. It also helps companies in receiving returns and refunds. Having a warehouse will also reduce transportation costs and increase the value of goods. Having the right products at the right time at the right place he's an underrated industry advantage.
Having a warehouse will also help in assembling, mixing, and cross-docking the products. As a result, one can ship parts of their products in a bulk and assemble them in their warehouses so that the shipping cost becomes competitive. Thus the difficulty in packaging your product will decrease significantly.
3. Economic benefits
Having warehouses in strategic positions around your customer base will cut down your expenditures and transportation costs. With an efficient warehouse, you can also store and distribute perishable products like medical, pharmaceutical, and agricultural products which offer better margins. As it cuts down costs significantly, you can also try new markets across the globe.
By utilising technological solutions in your inventory management, warehouse management, logistics and supply chain management, you can be the leading force in the logistics industry. With the use of technology, you can also reduce errors, increase flexibility, and enhance your customer service. All these points, in turn, will give you an economic advantage over others.
4. Effective utilisation of warehouse space
By increasing the use of technology and your experience levels, you can predict and manage your warehouse space effectively and efficiently. This helps you integrate your warehouse with the system and efficiently serve your customer base. You can predict a lack or surplus inventory according to the demands of your market and adjust your operations accordingly. Such efficiency and an opportunity to learn can take you places and make you an industry thought leader. With time and technology, you can master warehouse space management effectively.
Types of warehouses
There are several types of warehouses. With the invasion of technology, changing consumer behaviour, and the growing needs of humanity, the types of warehouses are expected to change over time. Here are some of the types of warehouses found as of now.
1. Distribution centre
Typically distribution centres are used for short periods for faster-moving products. With the e-commerce boom, distribution centres have taken the front seat in the warehousing industry. These higher-velocity products will be coming in and going out faster than traditional warehouse products. As a result, the distribution centres will have advanced technology when compared to warehouses.
Typically these are located near the end users which are nearest cities, metro cities, highways, ports, and airports. This makes it easier to move the fast-moving products from point A to point B within a short period. Distribution centres sometimes offer additional services like cross-docking, contract services, product mixing or package services. Due to a surplus of services, these centres are highly technology-dependent and detail-oriented.
2. Pick, pack, and ship warehouse
These are also popularised with the rise of e-commerce and online stores. When an order is received from an online store or a traditional offline store, the warehouse automated system searches and finds the products within the warehouse. These warehouses act as the mediator between sellers and movers. When they receive a pick list of products they pack and choose the right shipping method so that the product reaches the customer as fast as possible. Many online stores and eCommerce giants like Amazon and Flipkart are doing this through their logistics policies and strategies.
3. Smart warehouse
Smart warehouses are predicted to be the future of warehouse technology. There are already several machines, robots, and automation systems which are available for running smart warehouses. The point of the smart warehouse is to increase production, decrease errors, and minimise the number of humans and thus decrease operational costs. Smart warehouses also can be used in the logistics and supply chain of sensitive and dangerous products such as products related to defence, military, aerospace, medicine, research, chemical, and nuclear products. Hence, human contamination or the risk of compromise of information is reduced. Several warehouses are implementing warehousing technology to keep track of what comes in and goes out of the smart warehouses.
4. Cold storage
As the name suggests, cold storage facilities are used to store temperature-sensitive items which need low temperatures. Cold storage warehouses are the only storage warehousing solution required for storing perishable foods, medicinal plants, cosmetics, art, medicine, chemicals, and gases. These facilities also use refrigerated shipping for inbound and outbound shipping.
5. On-demand storage
This is a growing trend in warehousing platforms just like house rentals. On-demand storage facilities operate when there is a temporary need for warehousing for businesses which operate in a specific area. Often, warehouse facilities which have excess space will rent out that space to other businesses which need temporary solutions for their warehousing. Small businesses which have little to no money to build and operate warehouses near customer bases often resort to on-demand storage. During festival season or a spike in sales volume, smaller businesses utilise these facilities.
6. Bonded warehouse
These are also called customs warehouses which exist near international borders, ports, or airports. These are buildings in which imported goods from other countries are stored. Often, the goods are mixed or undergo manufacturing operations without first paying customs duty to the importing nation. However, the duty on these imported goods can be very high because of their nature. Hence these bonded warehouses allow the products to be sold first and then when the custom is paid by the purchaser, proceed to follow other legal processes.
Conclusion
Warehouses are a critical aspect of the logistics and supply chain industry. Primarily they are used for storage and safekeeping of the gods in the logistics system. Due to their strategic locations around the logistics and supply chain, they are used as a hibernation point between the manufacturer and the end user. They facilitate the uninterrupted movement of goods from a manufacturer and a distributor. The use of technological solutions has made warehouses competitive with the modern world. It can act as a distribution centre, pick pack and ship warehouse, smart warehouse, cold storage, bonded warehouse, and on-demand storage. All these types of warehouses help in inventory control, centralization of goods, and easy and flexible movement of goods from manufacturer to the customer.
Due to the intense use of technology modern automobiles and highly educated staff, warehouses can offer economic benefits for all the players in the supply chain industry. Effective utilisation of warehouse space with a technology-based business strategy will help logistics and supply chain managers and warehouse managers increase their profits and margins all over the year. In the future, warehouses will become more technology and machine-oriented due to the rapid robotization of the industry.
Before you leave, if you are a logistics and supply chain manager, SNATIKA offers a prestigious UK Masters degree in Logistics And Supply Chain Management. Our prestigious Masters degree program offers dual academic qualifications within a short duration of 12 months. Enrol in this program if you have a managerial position in the industry and want to learn warehouse management from a UK university. Visit SNATIKA today.