What is the function of a warehouse? (10 common functions)
By Indeed Editorial Team
Published 22 November 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Warehouses are buildings that organisations use to store goods, including food, furniture and clothing. A warehouse is part of a complex logistics network that enables companies to store, protect and move their products from place to place. Many people think the primary use for a warehouse is storage, but warehouses are the sites of many other functions for companies to streamline operations and ensure that stock is available and secure at all times. In this article, we explore what the function of a warehouse is and consider 10 major warehouse functions that contemporary warehouses fulfil in the supply chain.
What is the function of a warehouse?
The function of a warehouse is to store goods, usually temporarily. Warehouses may store goods for a certain time, from days to months and years. Warehouses have large doors so lorries can drive inside to deliver new inventory and take away older inventory. Warehouses are often near ports, airports, railway lines and motorways to increase accessibility and make it easier to carry out deliveries and transfers in good time. Warehouses are usually very large buildings, sometimes with multiple floors and ventilation systems to keep products at a suitable temperature.
10 uses for a warehouse
Organisations use warehouses to store goods and conduct many other essential operations within a warehouse. Alongside storing items, logistics teams carry out inventory checks and quality control checks in a warehouse. They also use the warehouse to protect goods and manage fluctuations in the product price. Below is a list of the 10 major uses for a warehouse and what each function involves:
The most obvious use for a warehouse is to provide space for storing goods, including inventory, equipment and other items. Having sufficient storage space to store many goods reduces waste because it provides safe storage of goods that an organisation doesn't sell immediately. It's possible to store many types of goods, including furniture and clothing, in a warehouse for a long period until they are ready for purchase or use. Organisations with warehouse storage space that exceeds demand are more able to respond to fluctuations in the market than those without excess storage space.
It's possible to split warehouse storage into two types, planned storage and extended storage. Planned storage is storage that an organisation anticipates is necessary to meet regular customer demand. Extended storage is storage that may sometimes be necessary above the requirements of planned storage, for example, if demand sometimes fluctuates due to seasonal changes or if the organisation requires extra stock temporarily due to a major sales promotion. It's essential that logistics leaders consider the needs of their organisation for both planned and extended storage when allocating storage space within warehouses.
2. Movement of goods
Warehouses also offer a safe space for the unloading and offloading of goods. This includes moving goods in multiple directions, such as inbound goods, outbound goods and goods transferal. Effective warehouse management ensures that the movement of goods throughout the warehouse is seamless, which maximises operational efficiency and increases the value for customers by reducing delivery times and ensuring that time-sensitive items, such as foods and other produce, ship out fresh. Organisations may be able to maximise the efficiency of the movement of goods by implementing contemporary warehouse management software.
3. Safeguarding goods
Warehouses also exist to safeguard goods and protect them from theft, damage and loss. Logistics managers ensure that warehouses operate at optimal temperatures and conditions for the items within them. This might mean controlling the temperature of the warehouse or increasing ventilation to protect items from dampness, dust and heat. Security staff and other security measures prevent theft and vandalism, and insecticides increase the preservation of perishable goods, including fruit and vegetables. Effective warehouse management ensures proper safeguarding measures are in place to maximise the lifespan of the goods in the warehouse.
4. Quality inspections
Quality inspections take place in warehouses. Warehouse staff are responsible for ensuring that inventory quality matches the quality that customers and buyers expect. This involves checking goods they receive against the packing list to ensure they align and inspecting goods to ensure they're free of damage from knocks and bumps on the journey. The warehouse offers the perfect space to carry out essential quality control checks and to ensure that the process shown on deliveries is accurate and matches up with the price paid by the company.
5. Stock counts
The warehouse is where most stock counts take place. Most organisations conduct regular stock counts to manually check the amount of inventory in the warehouse at any given time. Warehouse staff sometimes combine these counts with perpetual inventory management systems to provide an accurate view of the company's inventory. Warehouse staff carry out manual stock counts and check whether these line up with existing estimates to identify potential losses from theft, damage and other causes as soon as possible. Annual stock counts are a legal requirement for some businesses, while regular stock counts are logistically useful.
When logistics teams remove goods from the warehouse to dispatch them to their final destination, they also fill out paperwork, including invoices, packing lists and shipping documents to support the removal of the products. Documentation might also include acquiring clearance from transport authorities depending on the route that drivers are due to take. Warehouse staff ensure that all of this documentation is accurate and complete before delivering goods, and the warehouse provides the ideal setting to carry out these checks and complete all paperwork.
7. Pest control
Pest control is an important aspect of warehouse management. Pests, including rodents and insects, may cause significant stock damage to inventory that isn't properly protected. One of the uses of a warehouse is to safeguard products and inventory from pests through pesticides and mechanical prevention methods. If pest infestations worsen, they may result in major losses to stock as pests eat and contaminate fresh foods and gnaw through wiring and plastic. Warehouse staff monitor warehouse inventory closely for signs of pests and are responsible for carrying out effective pest prevention techniques regularly.
Financing is another major use for a warehouse. This is a type of inventory financing that involves raising finance from a bank or lender and using inventory or goods from the warehouse as collateral for this loan. Proper paperwork is key to warehouse financing because receipts of the deposit of goods in the warehouse are useful evidence. While the goods in a warehouse are in the custody of the 'warehouse keeper', the owner can use their value to apply for loans and secure funding, which is an important aspect of fundraising for many small businesses.
9. Price stabilisation
Businesses that make money by buying, manufacturing or selling goods are vulnerable to extreme price fluctuations. When the price of goods increases, this is a good time to sell, and when the price of goods decreases, this is a good time to buy. Having sufficient warehouse space to enable an organisation to stock more goods at times when supply exceeds demand is key to weathering these price fluctuations and stabilising the average buying and selling price of goods throughout the year.
Effective warehouse management involves predicting these fluctuations in supply and demand and adjusting buying and selling strategies to optimise long-term profits. Logistics managers are responsible for ensuring that adequate storage space is available for storing excess goods when demand is low, plus coordinating efficient packing and delivery of goods when demand is high. This helps organisations to maximise profits and weather seasonal price fluctuations to increase sustainability in the long term.
Cross-docking is the process of transferring goods from inbound to outbound vehicles without storing them in the warehouse in between. This allows for a reduction in inventory costs and an improvement in customer service by reducing the time it takes for products to reach their end consumers. Cross-docking is an essential function of most warehouses because it allows organisations to fulfil customer orders more quickly and reduces storage costs in the long term. Warehouse staff usually carry it out from the warehouse marshalling area, which is where they assemble or unpack goods during receipt or dispatch.
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