What is Warehouse?
A warehouse is a place to store the stock or the inventory. Most of the tasks that occur in a warehouse are related to inventory management. These tasks include accumulating the receipt of products, issuing of products, recording changes and tracking the movement of inventory.
The role of a warehouse is, at times, considered to be processing the inventory from entry to exit, and, sometimes, it is considered to be a simple storage facility for products in transit from the point of origin to the point of destination.
Table of Content
- 1 What is Warehouse?
- 2 Types of Warehouse
- 3 Types of Retailers
These days warehouse management has an important role in effective customer service. Warehousing can play a pivotal role in minimising supply chain inefficiencies to improve value addition during the logistical flow of products and inventory management, including consolidation and customisation of inventory. In a world-class warehousing environment, customer service improves and the costs of warehousing are reduced.
A warehouse is a building or an area or a facility where goods are stored. The warehousing activities involve the administrative and physical tasks concerned with the receipt, inspection, storage, retrieval and dispatch of goods.
Storage involves proper stocking of the related products together in a storage facility. Basically, warehousing is storage on a large scale. The place where the products are kept is referred to as the warehouse. A warehouse can be seen as a node/intersection where information and products flow between suppliers and customers. Thus, warehousing refers to the tasks concerned with the storage of products on a large scale in an organised method, which makes them easily available, whenever required.
Warehousing caters to different types of products. The structure of the warehouse and the facilities therein depend on the type of product to be stored therein.
Types of Warehouse
To meet the different requirements, different types of warehouses may be categorised as follows:
Warehouses owned/managed by businessmen to stock their own products are referred to as private warehouses. Some examples of such warehouses are those warehouses that are made by farmers near their fields or by wholesalers and manufacturers near their factories.
As the name suggests, warehouses where goods of the general public are stored, are referred to as public warehouses. Rent for storing goods is levied for storage. The government awards licence for such warehouses and also regulates their functioning.
Warehouses owned/managed by government bodies are known as government warehouses. Private organisations may also store their goods here. Food Corporation of India is an example of such a warehouse.
Goods for which import duty is yet to be paid are stored in a bonded warehouse. Such warehouses are usually located near ports.
Warehouses that are owned/operated by co- operative societies are known as co-operative warehouses.
Raw material, work-in-progress and finished goods warehouse
These warehouses are located near the production facility for the ease of access.
These warehouses consolidate products from different points of manufacturing or from different manufacturers for consolidated shipment to the customers.
These warehouses receive, pick and ship small orders for individual customers.
These are distributed across geographies in order to shorten transportation distances and provide a speedy response to customers. These can also supply individual products to the customers as frequently as desired.
Value-added service warehouses
In these warehouses, activities such as packaging, labelling, pricing and marking are performed as a value-added service to the customer.
Types of Retailers
The basic functions of a retailer are buying and assembling goods for selling to buyers. The responsibility of a retailer lies in the identification of the most economical source for obtaining the goods and selling them at a profit to the consumer. Thus, the general functions of a retailer are associated with warehousing and storing of goods.
Let us understand the different type of retailers. The different types of retail formats are explained as follows:
A departmental retail store is basically a large-scale organisation having different departments and handling a variety of merchandise under one roof. Departmental stores are a popular type of format and confine their activities to particular lines of business.
The management of all the departments is centralised and is controlled from a single established firm, but the stocks of every department are handled separately. The examples of departmental store are Shopper Stop, Lifestyle, Max fashion, etc.
Chain Stores or Multiple Stores
Multiple shops system is a system of opening branches at various locations under centralised management and having similar lines of products. The chain stores receive supply from the central office and remit its sale proceeds to the central office regularly or periodically.
Also, the activities of purchasing, pricing and advertising are controlled by the central office and are conducted centrally. Along with this, the branch shop is allowed to retain a small amount of cash on an interest basis to meet their day-to-day expenses.
For instance, Bata is a chain store that deals in footwear and has centralised management and various branches worldwide. Walmart, Subway are a few example of chain stores.
Consumer Cooperative Stores
Consumer Cooperative stores are established under the Cooperative Societies Act and are owned and operated by the members of the customers themselves. The capital of the store is provided by the shareholders, and the membership is voluntary. These stores are formed with the aim of serving customers, not for profit maximisation. The perfect example of consumer cooperative store is Apna Bazaar.
The main aim of the establishment of cooperative stores is to eliminate the middlemen who increase the cost of the products to the customers. They buy in large quantities from the manufacturers directly and sell them to their members at lower prices in comparison to market prices since there are no middlemen.
The profits earned by the cooperative store are utilised for growth and declaration of dividend and bonus to its shareholders. Also, some part of profits is utilised for social purposes such as donations, human welfare, etc.
Mail Order House (Catalogue Retailing)
Mail order type of retail format is also known as ‘sale through post’ or ‘postal sales’. Under this format, the retailers contact the prospective customers through advertising using various traditional modes of communication such as TV and catalogues or leaflets by giving information about products in it.
They provide details of the products through mail order and also reply through mail paid cards to the customers. On receiving the orders, they procure and supply goods to the customers through VPP (Value Payable Post), also through railway parcels or couriers. Such type of sales is mostly visible for the sale of magazines, books, etc.
Supermarkets or Self-service Stores
A supermarket is a large retailing store selling products such as groceries and general merchandise. In supermarkets concept, there are a large variety of merchandise products having low margin appeal with self-service criteria.
Goods are kept at open racks and shelves, and the prices after discounts are displayed so that customers can make decisions and pick the selected goods in the basket. After collecting all the necessary items, the customers make payment at the billing counter and take the delivery of goods.
The major difference between supermarkets and departmental stores is the salesman concept as at supermarkets, salesmen do not deal with customers and pressurise them for sale. However, supermarkets do not provide credit facilities and free home deliveries provided by most departmental stores. In many countries such as India, there are retail formats such as mandis, melas, kirana stores or super bazars.
Kirana Stores or Unorganised Retail Stores
These are operated by local retailers in the Indian market. These stores are related to the unorganised sector of the Indian market, which makes up a larger portion of the retail sector in the country.
The products are procured from the wholesalers or manufacturers directly, and it is upon the decision of the retailer to provide credit facilities to the customers or not. Generally, the retailer of Kirana stores provides credit facilities to its customers as they have a loyal and genuine customer base.
Super bazaars have interrelated functioning as supermarkets, but the products in these bazaars mainly consist of eatables such as fresh fruits, vegetables, dry fruits, meat or dairy goods. Several super bazaars can be seen in different cities of India such as Connaught Place in Delhi. India has around 100 super bazaars functioning in metro cities.
Mom and Pop Store, Kirana Stores or Unorganised Retail Stores
These are operated by local retailers which can be individual or family-owned small business entities in the Indian market. These stores are related to the unorganised sector of the Indian market, which makes up a larger portion of the retail sector in the country.
The products are procured from the wholesalers or manufacturers directly, and it is upon the decision of the retailer to provide credit facilities to the customers or not.
Generally, these retailer of Kirana stores provides credit facilities to its customers as they have a loyal and genuine customer base.