Page 8 - Warehouse 1 to 9

8 9
Stockpiling – Meeting seasonal requirements
This function allows warehouse to store goods for seasonal requirements. For example, farm
products like Wheat or Rice are harvested once a year, stored at the warehouse and consumed
throughout the year. There are products like Air conditioners which are manufactured throughout
the year, stored at the warehouse and sold mainly during the summer season. Both situations require
stockpiling function of the warehouse for storage throughout the year.
The key benefit from this function is they warehouse allows production or consumption throughout
the year without being affected by seasonal factors
Value Added Services
Warehouse also provides several value added services.
Packaging: Packaging or repackaging of products can be done at the warehouse.
Labeling: MRP labeling or change in stickering or new instructions on the product can be pasted
in the warehouse.
Grading: Grading of products like farm products can be done at the warehouse.
Kitting: Combining various items into a single kit. Suppose a promotional offer is going on. Example
one soap free with 1 liter of shampoo. The kitting of the shampoo with soap is accomplished at
the warehouse.
Figure 1.4 Kitting of products at warehouse.
1.4 The need for Warehousing
Warehousing: A Supply Chain Necessity
Had it been a perfect Supply Chain where we produce what the cosumer wants, warehouse has no
place. As a perfect supply chain never exists, warehouse is required to ensure a continuous flow of
material from source till end consumption.
Warehousing: A contributing factor to Company’s Profit
There are several ways in which warehouse contributes to the profitability of the organization:
o Warehouse by storing inventory smooths out the fluctuations in the demand and supply. To keep
the customer happy, company need to provide uninterrupted flow of products. Happy customers
being further business to the company.
o As warehouse smoothens the supply, this allows manufacturing to produce in the best lot sizes.
It allows the manufacturing to make the best possible use of capital, labour and raw material.
Even in case the consumption is seasonal, warehouse allows production round the year.
o In case of certain goods particularly commodities, warehouse allows to reduce the buying prices
by buying the stock in larger quantities when the prices are low.
Warehousing: Optimum Utilization of Time
Warehouse brings huge time utility benefir by bridging the gap between production and consumption.
Some goods are produced throughout the year but demanded only during particular seasons,
e.g., soft drinks, AC, wool, raincoat, umbrella, heater, etc. on the other hand, some products are
demanded throughout the year but they are produced in certain region, e.g., wheat, rice, potatoes,
etc. Goods like rice, tobacco, liquor and jaggery become more valuable with the passage of time.
Warehouse helps in making available the goods whenever required or demanded by the customers.
Warehousing: Minimization of risk
Warehouse allows safe custody of the goods and protects the goods from peril of theft, fore or
floods. The goods kept in the warehouse are insured by the company and can claim compensation
from the insurance company in case of any loss.
Warehousing: Helps in Packing, grading and Value adding
Certain products require certain value addition to be done at the warehouse. Agricultural
commodities may require grading of the goods. Kiting is a common service at the warehouse, for
running promotional schemes. Warehouse may be required to do labeling. The prospective buyers
can inspect the goods kept in a warehouse. A modern warehouse provides various ways of adding
value to the product.