Key Functions of Warehousing in Supply Chain

Warehousing is more than just storing goods. It plays a vital role in supply chain management. In a cutthroat market with numerous competitors, effective warehouse management is necessary not only for the smooth flow of goods but also to improve the supply chain by reducing costs and improving customer satisfaction. In this article, we will discuss some of the key functions of warehousing in a supply chain.

What Is Warehousing?

Warehousing, in simple terms, means storing goods in a specific location. It helps businesses store a large quantity of inventory based on demand. The required quantity of goods is then supplied via the warehouse. So, a warehouse is a central hub where goods are received, stored, and then dispatched according to business requirements. 

Key Functions of a Warehouse in the Supply Chain

The different functions of warehousing ultimately support businesses and help in the smooth flow of goods, thus ensuring robust supply chain management. The different functions and features of warehousing are explained below:

Efficient Storage of Goods

Whether it is raw materials, finished products, or fragile and perishable items, the warehouse is the perfect place for bulk storage. Warehouses are designed to store inventory in a structured and efficient manner. Proper warehouse storage aims to minimise the risk of theft, damage, or even deterioration of certain goods. 

For instance, if perishable goods are stored in a warehouse, the temperature must be controlled. Likewise, if food items are stored in the warehouse, the warehouse must have the necessary licenses and approvals to ensure food safety. 

Consolidation and Break-Bulk

Warehousing is a central point for storing and dispatching goods. It helps consolidate goods from different sources, break them down into smaller quantities, and distribute them to different destinations.

Consolidation involves combining goods from multiple suppliers and shipping them in one shipment. Break-bulk involves splitting huge shipments into smaller units that are easy to handle and distribute to multiple supply points.

Inventory Management

Inventory management is one of the core functions of warehousing, which efficiently facilitates supply chain management. Warehousing helps track stock levels, manage reorder points, and prevent stockouts or even overstocking of goods.

Thanks to automated warehouse management systems, businesses can now access real-time inventory data without physically visiting the warehouse.

Security

The need for warehousing security is quite essential for supply chain management. A proper warehouse helps prevent material spoilage and unnecessary delays. With a proper security system, the goods in the warehouse are safe from theft.

Order Fulfilment

Instead of having multiple channels at different locations for picking, packing, and shipping the goods, they can be centralised in a single warehouse. It will help fulfil orders faster and ensure timely delivery to customers, improving customer satisfaction. Warehousing also simplifies inventory distribution and sorting.

Reduced Risks

Since warehouses have a large capacity for good storage, they help mitigate the risks of price fluctuations in the future. Suppliers can stock up the goods when the cost of the goods goes down.

Getting insurance is an integral part of efficient warehousing. Hence, compensation can be received in case of fire, theft, or any other damage, reducing the risk of monetary loss.

Value-Added Services

Simplified warehousing also includes services like labelling, product customisation, and assembly to meet customer and regulatory requirements and facilitate the supply chain process. 

A warehouse houses multiple activities apart from storage, which significantly enhances the value of the entire supply management process and quality control in the supply chain.

Seasonal Storage

Since product demand differs from peak to off-peak season, it is essential to have a place to store all the goods according to seasonal demands. Warehouses are apt for storing goods for a long time, thus ensuring their availability whenever required.

Stabilisation of Prices

When demand is low, goods can be stored in warehouses and released when demand is high. It can significantly stabilise the market price by balancing the demand-supply relationship.

How Does a Warehouse Function?

Different processes take place, from when a shipment is received in a warehouse to when a shipment is dispatched. Below is a step-by-step warehouse activities:

• The first process is when a shipment of goods arrives at the warehouse. Then, it is checked and verified against purchase orders to ensure that the shipment meets the quality and quantity standards.
• Next, depending on the space, utilisation, and retrieval of the shipment, goods are systematically arranged. It is one of the core warehouse activities.
• Optimum storage conditions are maintained to ensure that the goods are in proper condition. The temperature and pressure for fragile or perishable goods are controlled.
• Next, as the order is placed, specific items are retrieved from storage.
• The items are then appropriately packed to ensure their safety for transportation. Labelling and documentation are also part of this process.
• Goods are dispatched and handed over as designated.

Also check – Logistics Duties and Responsibilities in E-commerce

Why is Warehousing Important?

Below are the main reasons why warehousing is necessary:

• Warehousing ensures product availability at all times.
• Warehouses streamline logistics operations, thereby reducing transit time.
• Bulk storage can minimise transportation costs.
• As warehousing ensures faster delivery, it helps to fulfil orders faster.
• The fast delivery and all-time availability of goods result in enhanced customer satisfaction.

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Learn Why Traditional eCommerce Warehousing Fails in Quick Commerce

Conclusion

Warehousing is one of the most critical processes in supply chain management. Its several functions, such as storing goods, consolidating, breaking up, order fulfilment, risk mitigation, price stabilisation, etc., lead to smooth inventory management and efficient logistics. With the availability of new technologies, warehousing processes are becoming more efficient and environmentally friendly. By knowing the key functions and importance of warehousing, businesses can optimise their supply chain management for substantial growth.

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