Warehousing is the act of storing goods that will be sold or distributed later. While a small, home-based business might be warehousing products in a spare room, basement, or garage, larger businesses typically own or rent space in a building that is specifically designed for storage.
Warehouse vs. distribution center
You might hear “warehouse” and “distribution center” used interchangeably, but technically, a warehouse provides nothing more than storage. A distribution center, on the other hand, stores product but also fulfills orders.
Whether the purpose is strictly storage or storage plus order fulfillment, warehouses use specific elements that help manufacturers, distributors, and retailers monitor inventory and store it safely. An overview of basic elements includes:
- Shelving and rack systems that offer maximum storage capacity and easy product access.
- A climate control system for the product being stored. This is particularly important for frozen products or those requiring refrigeration, including certain pharmaceutical or laboratory products, and others that degrade if exposed to too much heat.
- Inventory control software that tells the product owner – who isn’t necessarily the building owner – where all individual units are in the system at all times.
- Equipment that can move products from point A to point B – forklifts, pallet jacks, bins that hold products for orders, and conveyor belts, for example.
- Shipping supplies for order fulfillment.
- People who load products into a warehouse and others (“pickers”) who fill orders in a true distribution center, plus those who manage the facility and operation.
- Security to protect stored products.
- Access to cost-effective transportation to bring products in or move them out as orders are fulfilled. That often means easy access to interstates, rail lines, or airports.
The business of warehousing
Warehousing and all that goes along with it is part of a sophisticated industry known as logistics management. Logistics includes procurement, inventory management, and distribution. It falls under the supply chain umbrella, which also includes product development, marketing, sales, and other product-related disciplines.
What is warehousing?
What are the 4 types of warehousing?
- Private Warehousing
- Public Warehousing
- Contract Warehousing
- Cold Storage Warehousing
What are the 3 basic functions of warehousing?
- Order Fulfillment: Warehouses are responsible for fulfilling customer orders by picking, packing, and shipping products.
- Inventory Management: Warehouses play a major role in keeping track of inventory levels and ensuring stock is regularly replenished.
- Asset Protection: Warehouses must also protect their assets from environmental factors and theft. They also need to ensure that products are stored in a safe and secure manner.