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1. Storage: 9. Convenient location –
This is the basic function of warehousing. Surplus commodities which are not needed immediately Warehouses are generally located at convenient places near road, rail or waterways to facilitate
can be stored in warehouses. They can be supplied as and when needed by the customers. movement of goods. Convenient location reduces the cost of transportation.
2. Price Stabilization:
10. Easy handling –
Warehouses play an important role in the process of price stabilization. It is achieved by the creation
of time utility by warehousing. Fall in the prices of goods when their supply is in abundance and Modern warehouses are generally fitted with mechanical appliances to handle the goods. Heavy
rise in their prices during the slack season are avoided. and bulky goods can be loaded and unloaded by using modern machines, which reduces cost of
handling such goods. Mechanical handling also minimizes wastage during loading and unloading.
3. Risk bearing:
11. Useful for small businessmen –
When the goods are stored in warehouses they are exposed to many risks in the form of theft,
deterioration, exploration, fire etc. Warehouses are constructed in such a way as to minimize these Construction of own warehouse requires heavy capital investment; which small businessmen
risks. cannot afford. In this situation, by paying a nominal amount as rent, they can preserve their raw
4. Financing: materials as well as finished products in public warehouses.
Loans can be raised from the warehouse keeper against the goods stored by the owner. Goods act 12. Creation of employment –
as security for the warehouse keeper. Similarly, banks and other financial institutions also advance
loans against warehouse receipts. In this manner, warehousing acts as a source of finance for the Warehouses create employment opportunities both for skilled and unskilled workers in every part
businessmen for meeting business operations. of the country. It is a source of income for the people, to improve their standards of living.
5. Grading and Packing: 13. Facilitates sale of goods –
Warehouses nowadays provide the facilities of packing, processing and grading of goods. Goods Various steps necessary for sale of goods such as inspection of goods by the prospective buyers,
can be packed in convenient sizes as per the instructions of the owner. grading, branding, packaging and labelling can be carried on by the warehouses. Ownership of
goods can be easily transferred to the buyer by transferring the warehouse keeper’s warrant.
6. Protection and Preservation of goods –
Warehouse provides necessary facilities to the businessmen for storing their goods when they are 14. Availability of finance –
not required for sale. It provides protection to the stocks, ensures their safety and prevents wastage.
It minimizes losses from breakage, deterioration in quality, spoilage etc. Warehouses usually adopt Loans can be easily raised from banks and other financial institutions against the security of the
latest technologies to avoid losses, as far as possible. warehouse-keeper’s warrant. In some cases, warehouses also provide advance to the depositors of
goods on keeping the goods
7. Regular flow of goods –
15. Reduces risk of loss –
Many commodities like rice, wheat etc. are produced during a particular season but are consumed
throughout the year. Warehousing ensures regular supply of such seasonal commodities throughout Goods in warehouses are well guarded and preserved. The warehouses can economically employ security
the year. staff to avoid theft, use insecticides for preservation and provide cold storage facility for perishable
items. They can install fire-fighting equipment to avoid fire. The goods stored can also be insured for
8. Continuity in production –
compensation in case of loss. Goods kept in a warehouse are insured at the risk of the warehouse
Warehouse enables the manufacturers to carry on production continuously without bothering owner. Storing goods at an off-site warehouse minimizes inventory loss from theft, fire, damage,
about the storage of raw materials. It helps to provide seasonal raw material without any break, for etc and transfers this risk to the warehouse. It’s their insurance claim and the warehouse insurance
production of finished goods. company who will be paying any compensation.
