Introduction to Warehouses

Warehouse is a storage structure constructed for the protection of the quality and quantity
of the stored produce. The need for a warehouse arises due to the time gap between
production and consumption of products. Warehousing or storage refers to the holding
and preservation of goods until they are dispatched to the consumers. By bridging this
gap, storage creates time utility. There is a need for storing the goods so as to make them
available to buyers as and when required. Storage enables a firm to carry on production in
anticipation of demand in future. Warehouses enable the businessmen to carry on
production throughout the year and sell their products, whenever there is adequate
demand. Need for warehouses arise also because some goods are produced only in a
particular season but are demanded throughout the year. Similarly, certain products are
produced throughout the year but demanded only during a particular season. Warehouse
allow transport optimization along the supply chain, and allow companies to work with
an optimal inventory (economic order quantity) regarding service quality. For example, at
the terminal point of a transport system it is necessary to stockpile produce until a full
load can be transported. Warehouses can also be used to store the unloaded goods from
the vessel.

Need for Warehousing

Warehousing is necessary due the following reasons.
(i) Seasonal Production- We know that agricultural commodities are harvested during
certain seasons, but their consumption or use takes place throughout the year.
Therefore, there is a need for proper storage or warehousing for these commodities, from
where they can be supplied as and when required.
(ii) Seasonal Demand- There are certain goods, which are demanded seasonally, like
woolen garments in winters or umbrellas in the rainy season. The production of these
goods takes place throughout the year to meet the seasonal demand. So there is a need to
store these goods in a warehouse to make them available at the time of need.
(iii) Large-scale Production - In case of manufactured goods, now-a-days production
takes place to meet the existing as well as future demand of the products. Manufacturers
also produce goods in huge quantity to enjoy the benefits of large-scale production,
which is more economical. So the finished products, which are produced on a large scale,
need to be stored properly till they are cleared by sales.
(iv) Quick Supply - Both industrial as well as agricultural goods are produced at some
specific places but consumed throughout the country. Therefore, it is essential to stock
these goods near the place of consumption, so that without making any delay these goods
are made available to the consumers at the time of their need.
(v) Continuous Production- Continuous production of goods in factories requires
adequate supply of raw materials. So there is a need to keep sufficient quantity of stock of
raw material in the warehouse to ensure continuous production.

(vi) Price Stabilization- To maintain a reasonable level of the price of the goods in the
market there is a need to keep sufficient stock in the warehouses. Scarcity in supply of
goods may increase their price in the market. Again, excess production and supply may
also lead to fall in prices of the product. By maintaining a balance of supply of goods,
warehousing leads to price stabilization.
(vii) A warehouse provides facilities for processing, packing, blending, grading etc, of the
goods for the purpose of sale. The prospective buyers can inspect the goods kept in a
warehouse.
(viii) Warehouses provide a receipt to the owner of goods for the goods kept in the
warehouse. The owner can borrow money against the security of goods by making an
endorsement on the warehouse receipt. By keeping the imported goods in a bonded
warehouse, a businessman can pay customs duty in installments.

Types of Warehouses
Below we discuss five types of warehouses:
1. Private Warehouse
This type of warehouse is owned and operated by channel suppliers and resellers and
used in their own distribution activity. For instance, a major retail chain may have
several regional warehouses supplying their stores or a wholesaler will operate a
warehouse at which it receives and distributes products.
2. Public Warehouse
The public warehouse is essentially space that can be leased to solve short-term
distribution needs. Retailers that operate their own private warehouses may
occasionally seek additional storage space if their facilities have reached capacity or
if they are making a special, large purchase of products. For example, retailers may
order extra merchandise to prepare for in-store sales or order a large volume of a
product that is offered at a low promotional price by a supplier.
3. Automated Warehouse
With advances in computer and robotics technology many warehouses now have
automated capabilities. The level of automation ranges from a small conveyor belt
transporting products in a small area all the way up to a fully automated facility
where only a few people are needed to handle storage activity for thousands of
pounds/kilograms of product. In fact, many warehouses use machines to handle
nearly all physical distribution activities such as moving product-filled pallets (i.e.,
platforms that hold large amounts of product) around buildings that may be several
stories tall and the length of two or more football fields.
4. Climate-Controlled Warehouse
Warehouses handle storage of many types of products including those that need
special handling conditions such as freezers for storing frozen products, humiditycontrolled environments for delicate products, such as produce or flowers, and dirtfree facilities for handling highly sensitive computer products.

5. Distribution Center
There are some warehouses where product storage is considered a very temporary
activity. These warehouses serve as points in the distribution system at which
products are received from many suppliers and quickly shipped out to many
customers. In some cases, such as with distribution centers handling perishable food
(e.g., produce), most of the product enters in the early morning and is distributed by
the end of the day.
The Government has set up three agencies, which are engaged in building largescale storage/warehousing capacity:
Food Corporation of India (FCI)
It was established with the objective of fair distribution of food grains and to bring about
stability in the prices in the country. It has the provision of scientific storage for the
millions of tonnes of food grains procured by it. In order to provide easy physical access
in remote and inaccessible areas, the FCI has a network of storage depots strategically
located all over India. These depots include silos, godowns and an indigenous method
developed by FCI, called Cover and Plinth (CAP). CAP storage is a term given to storage
of foodgrains in the open with adequate precautions such as rat and damp proof plinths,
use of dunnage and covering of stacks with specially fabricated polythene covers etc.
FCI, thus maintains the health of the large stock of the tonnes of food grains in storage
through its excellent storage management.
Central Warehousing Corporation (CWC)
It is a premier warehousing agency in India and is one of the biggest public warehouse
operators in the country offering logistics services to a diverse group of clients. It is
operating490 Warehouses across the country with a storage capacity of 9.8 million
tonnes providing warehousing services for a wide range of products ranging from
agricultural produce to sophisticated industrial products. Warehousing activities of CWC
include foodgrain warehouses, industrial warehousing, custom bonded warehouses,
container freight stations, inland clearance depots and aircargo complexes. Apart from
storage and handling, CWC also offers services in the area of clearing & forwarding,
handling & transportation, procurement & distribution, disinfestation services,
fumigation services and other ancillary activities. CWC also offers consultancy
services/ training for the construction of warehousing infrastructure to different agencies.
17 State Warehousing Corporations (SWCs)
Warehousing corporations are also set up in different States of the country, like Andhra
Pradesh State Warehouse Corporation; Haryana Warehousing Corporation, Kerala
State Warehousing Corporation, etc. The area of operation of the State Warehousing
Corporations is centres of district importance. The concerned State Governments and the
Central Warehousing Corporation contribute the total share capital of the State

Warehousing Corporations equally. The SWCs are under the dual control of the State
Government and the Central Warehousing Corporation.