As a business owner, you’ve may have started to consider warehousing. Warehousing offers many benefits to businesses who need a good way to store inventory, including increased productivity and efficiency, as well as lower costs. You may also be wondering what the purpose of a warehouse is. JRC Dedicated Services breaks down the main functions of a warehouse and how a warehouse can help your business.
Storing Inventory
Perhaps most obviously, the primary purpose of a warehouse is storage. Businesses who use a warehouse can store surplus inventory that is not needed immediately. This helps businesses with efficiency and customer service, as this inventory can be supplied when needed by customers – there is no need to wait on shipping and delivery times after a customer orders your product. Storing inventory in a warehouse can also protect your goods, as warehouses maintain strict regulations regarding temperature, humidity and other important storing conditions.
Warehouses don’t merely store inventory, they do so strategically, increasing efficiency and lowering costs for your business. For one, warehouses keep track of your goods through industry management, to ensure that the right amount of product is stored and that no inventory data slips through the cracks. Additionally, many warehousing use one of three management strategies depending on the goods stored:
- FIFO: The FIFO method, which stands for first in, first out, is exactly as it sounds and consists of shipping out the oldest inventory first. This is especially important with perishable goods as sending out the freshest products to complete an order will result in older stockpiles spoiling and creating losses for the company.
- FEFO: This method stands for first expiring, first out. This method is also helpful for companies with goods that expire quickly, such as fruits or dairy products.
- LIFO: The LIFO method stands for last in, first out. This method is only ideal for stored products with no expiration date. Also, if you manufacturing costs are rising, LIFO can allow you to relate recent costs to recent revenue, saving money on taxes.
Other Important Functions of a Warehouse
While storage is the main function of warehousing that comes to mind for most people, in actuality, a warehouse can provide many other important functions that can help improve and grow your business.
Price Stabilization
A less obvious, but extremely important, function of warehouses is price stabilization. Warehouses can help your business reduce extreme price fluctuations by storing goods when demand is lower than supply and release products when demand is higher than supply. By matching supply with demand, warehouses help stabilize prices and prevent profit loss.
Risk Management
When goods or products are stored, they are exposed to a wide variety of risks, including theft, deterioration, or fire. Warehouses help mitigate these risks through the way they are constructed and maintained. Some warehouse risk management practices include:
- Installing fire suppression systems
- Installing backup systems
- Ensuring the warehouse is up to code
- Putting Electronic security and surveillance systems in place
- Training staff to recognize and prevent disasters
Transportation
While transportation is not a direct function of warehousing, most of the time warehousing and transport go hand in hand. Therefore, many warehouses offer transportation services to businesses. A warehouse with transportation services streamlines your supply chain, making it quicker and more efficient for goods to reach your customers. Furthermore, with a warehousing and transportation done at the same place, your business can reduce transportation costs as well.
Grading and Packing
Certain products, such as coffee or agricultural goods, need to be conditioned or process in order to be fit for use. Today, most warehouses provide processing, packing, blending and grading services for goods intended for sale. Similar to transportation, grading and packing in the same warehouse helps streamline the supply chain, saving your business time and money.
Learn More About What Warehousing Can Do for Your Business
Warehousing performs many functions for your business supply chain, increasing efficiency and customer service, while lowering costs. Contact our experts at JRC Dedicated Services to learn more about what warehousing can do for your business.
