Warehousing is essential for every business that deals in supplying goods to the consumers. A warehouse is a huge spacious building that is used to store huge quantities of goods. This is a very important function of the supply chain management. Warehousing is not just about storing of the goods but may also include packaging of the goods and also distribution of the goods and the services. Each supplier holds this service dearly because an efficient warehousing and distribution system promotes favorable returns. The importance of this service includes;
Reduced Operation Cost
In order to maintain high profits, you need a good warehousing service provider where he can be able to provide efficient services. A warehouse offers a centralized location where you can store your goods and therefore you don’t need to build structures or buy equipment to help in storing your goods. It offers you space and also the right equipment that can be used for your goods e.g. cranes. Some of the equipment, you may not need to use them all the time and hence you don’t need to buy them. Installation expenses of the equipment are also saved for you thus enabling you to save cost and time. As we have said earlier, distribution services and packaging services can also be offered at the centralized location. This is an advantage for the customer since you require fewer employees. Due to the reduced expenses you can obtain the low-cost leader in the market and ensure high profits due to these services.
Many businesses fail to expand because they do not have the place to store their goods. A good warehousing service is important for you to be able to expand your services. This is because it will provide you with the storage facility and also the additional services that you need at a reduced cost. For your additional goods, you can obtain a warehouse that packages and distributes the product while carrying out value adding activities.
Balancing of Demand And Supply
A business`s goal should be maximize profit and minimize the costs. The business should be able to identify what the customer needs and when he needs it and ensure that you supply the good at that particular time. It will be very unfortunate when your customer needs a good and you are not able to supply it. On the other hand, it will be a loss on your side when you have excess stock and your storage costs are continuing to increase while the demand for the goods is low. This shows you have to understand the dynamics of demand and supply and use them in warehousing to have a good warehousing service. The inventory manager has a role to ensure that your warehousing services are streamlined and you have appropriate stock levels. An effective warehousing service ensures that you minimize your cost and also ensures that your inventory levels are appropriate, that means no stock outs. If you are able to balance demand and supply you will be able to minimize the warehousing costs and in the end have high profits
Good warehousing services will ensure that the goods are stored correctly according to their shape and size. If the goods are damaged they will fetch low costs in the markets and your profits will be low. It is important to ensure that you obtain a good warehouse that will not only offer you good services but will also ensure you maintain your profitability