Warehousing Benefits: Top 10 Benefits of Warehousing – Explained! (2024)

Warehousing has many benefits to offer to traders/businessmen, whether it is wholesale or retail, it provides a number of benefits listed as under:

(i) Safety and Preservation:

Manufacturers, importers, wholesalers, exporters, traders and stockiest use warehouses to store their goods (raw materials and finished items) before distribution and sale. Besides, serving the storage purpose, warehousing facilitates preservation facility against water, fire, theft and climatic changes. Due to technological advancements, safety measures and computerization, warehouses minimize spoilage, errors, accidents, omissions, breakage, deterioration in quality etc.

(ii) Trouble Free Handling:

Today warehouses are usually large plain buildings in industrial or institutional areas of cities and towns equipped with loading docks to load and unload trucks, from railways, seaports or airports. They also have automatic forklifts and cranes for moving goods from one place to another within the warehouse area. Some warehouses are completely automated with no workers working inside resulting in minimum wastage and easy handling during loading and unloading goods.

(iii) Ensuring Continuous Supply:

Certain commodities like agricultural products are produced during a certain period of year but consumed or required throughout the year. Warehouses ensure adequate supply of such seasonal products throughout the year without any break.

(iv) Lifeline for Small Traders:

Due to rising costs of land and financial limitations, small traders cannot afford to have their private warehouses. Public or government warehouses facilitate them to store goods at affordable rates. In absence of warehouses, it will be difficult for small traders to survive in cut-throat competition because ‘stock out’ situation if persists for long, can disrupt the image and goodwill of the traders especially the small traders who have no/limited marketing budget to spend.

(v) Assisting in Continuous Production:

Warehouses facilitate the manufacturers to produce goods throughout the year without much attention of raw material shortage. The manufacturers who usually produce in bulk require raw materials in large quantity. Warehouses assist them to provide agricultural (seasonal) and industrial goods all over the year.

(vi) Location Advantage:

Most of the warehouses are located at a convenient place near railways, highways, seaports and airports that facilitate smooth movements of goods. Further, convenient location reduces the distribution cost to great extent.

(vii) Employment Generation:

Warehouses are usually large plain buildings in industrial areas of cities and towns covering huge storage area. Warehouses located in or near industrial areas are so big that can store goods of large number of businessmen at a time. Further, besides storage, warehouses perform several functions like procurement, sorting, dividing, marketing, preparing for shipment, handling, inventory control, display, order processing, financing, transportation, grading and branding and so on resulting in employment generation in various sections and at various levels. It is the source of bread and butter for several laborers, workers, employees and officers.

(viii) Financing:

When businessmen store goods in the warehouses upon certain formalities, they get ‘deposit receipt’, which acts as a proof about the deposit of the goods. Warehouses also issue a document in the name of owner against storage of goods, which is known as warehouse-keeper’s warrant. This document can be transferred by simple endorsem*nt and delivery. Businessmen on account of these documents (warrants) may get financial aids/loans from banks, private tenders on financial companies. In some cases, warehouses also provide finance to the businessmen on keeping goods as collateral security.

(ix) Risk Reduction:

Warehouse owners/authorities make certain that the goods stored in their warehouses are well protected, preserved and monitored. In order to keep proper information about good details, to save goods from theft and pilferage, warehouses employ employees and security staff.

For perishable items, they provide cold storage facility, to protect warehouse from fire, fire-fighting equipments are used. On requirement, goods stored may be insured against unforeseen mishaps like loss due to fire, theft and natural disasters.

(x) Assisting in Selling:

Most of the warehouses, as per requirements from depositors’ side, provide assistance towards inspection of goods, sorting, branding, packaging, financing and labeling that is essential towards sale of goods. In certain cases, transport arrangements may be availed to depositors for their bulk deposits.