Functions of a Warehouse

What Are the Functions of a Warehouse?

Warehousing is a crucial part of the supply chain. And to effectively manage a warehouse, it’s important to understand its functions. In the past, warehouses were solely used for storing goods. However, modern warehouses serve a much wider purpose. Aside from storing goods, warehouses are responsible for facilitating movement, price stabilization, and more.

Modern warehouses are the home of many crucial operations. It is where goods arrive or are distributed, so it’s important for organizations to pay close attention to their warehouse management systems.

So, here are the other major functions of a warehouse that are very important to understand if you wish to optimize warehouse functionality:

Storing Goods

The warehouse’s original function was purely for storage. And while modern warehouses serve many more purposes, storing goods remains a primary function. This is where organizations can store their goods, equipment, inventory, and other items.

Different warehouses store different goods. There may be some warehouses with temperature control elements that are important for storing temperature-sensitive products. That way, only fewer goods will expire and go to waste.

There are two primary approaches to storing goods in a warehouse. The primary approach is planned storage, wherein the company carefully estimates customer demand and stores ample goods to meet the demand.

Additionally, there is also extended storage. This is for products whose demand may increase or decrease depending on several factors. This allows businesses to better estimate their stocks to meet customer demands.

Securing Goods

As mentioned earlier, warehouses prevent goods from spoiling and expiring. When certain products are exposed to heat, wind, and other environmental factors, they may lose freshness. This costs an organization a lot as these goods have to be thrown out.

But aside from preventing goods from spoiling, warehouses protect them from theft. Warehouses are secure facilities where organizations can safely store goods. And since the goods are kept in one place, there’s a smaller chance of losing them, which can happen if they are constantly on the road.

Modern warehouses are carefully designed around the products which they store. If there are products that require extra security, specific temperatures, and other specific storage instructions, a good warehouse should be built around these needs.

Facilitating Movement

The warehouse is the main hub for receiving and sending out goods. Many organizations use the warehouse as the point of unloading and sending out products. It’s important for the movement of products to be seamless to allow organizations to stick to schedules and consistently meet customer demand.

When everything is unloaded and sent out from the same place, the entire process is much simpler for everyone involved. Whether you manufacture products yourself or buy them from different sources, having them delivered to and sent out from a warehouse offers a much more streamlined process.

This is especially important when handling time-sensitive products that may expire if stored too long.

Stabilizing Prices

Keeping products in a warehouse allows you to adjust the supply to customer demand. This can prevent sporadic and sharp spikes or dips in price that can do a lot of damage to a business.

For example, when there is low demand on the market, you can use the warehouse to safely store goods. That way, the goods will stay fresh and useable while the demand is low. And when the demand eventually increases, you can send out the stored goods in good condition.

When there is too much supply for the current demand, prices can drop. When this happens, manufacturers and organizations may take a big hit. So, by warehousing products, you can prevent prices from dropping sharply.

This is one of the more abstract and unseen functions of a warehouse. However, it can bring a lot of benefits to an organization.

Additional Processing

The warehouse also serves as a place to conduct value-added services to products. This can increase their value, subsequently boosting the company’s revenue.

For example, employees can customize, repack, or rebrand specific products. That way, you can meet the demands of certain retailers that boost satisfaction while also increasing overall revenue.

Other value-added services you can perform in the warehouse include gift wrapping, labeling, quality checking, and bundling.

Documentation

The warehouse also serves as the hub for information. This is where you can find documentation of which goods were shipped, what goods are in stock, and any future deliveries that may come in the future.

This allows warehouse managers to fully keep track of operations and processes throughout the supply chain. That way, operations are more organized, increasing efficiency and productivity.

Employees can conduct inspections, create reports, and store information on all operations from their warehouse data. While most organizations digitize this information, the warehouse remains the source of all the information.

When warehouses are used properly, you can refer to warehouse documents to learn a lot about how your business operates on the ground. This includes when certain products were shipped, different clients and customers, and when sales were high or low.