Warehousing is a building where goods are stored or kept until they are required for use.
It is an aid to trade which is a means of keeping and storing of goods and raw materials to protect them against damage from pests, theft, atmospheric condition etc.
This is aids to trade ensures goods reach the consumer in the desired form and a steady supply of goods of row materials is certain.
Importance of warehousing to businessmen
- It encourages more production which enables producers to produce on a large scale since storage is assured.
- It helps to maintain a constant supply of goods to consumers.
- Certain goods that are seasonal like raincoats, umbrellas and seasonal cards can be stored until they are required for use.
- Warehousing stabilizes prices because it stores goods whose supply fluctuates periodically.
- Warehousing protects goods against bad weather conditions, pest, theft, damage, waste etc
- Goods are stored so that the required quality is ensured. Some goods have to mature before consumption eg wires
- Warehousing reduces conjunction at terminals such as airports, seaports etc. since imports will store awaiting the clearance of taxes
- Warehousing stores raw materials which are waiting for processing by manufactures
- It is a valuable source of employment for those who are working in its various departments
- Activities like advertising through branding, packing and so that can be done in a warehouse
- Goods are kept until taxes are paid in bounded warehouses. This assists both the taxpayers and the revenue authority in terms of convincing of payment.
- Goods in the band can also be broken down into smaller quantities to meet the needs of the retailers.
Characteristics of a warehouse
In order for the warehouse to operate efficiently and effectively, it should have the following;
- Adequate storage space for the goods.
- It should have qualified staff e.g purchase officers, account officers, transport officers etc.
- Should be located near traders e.g wholesales, retailers where goods will be sold.
- It should have tight security to offset the dangers of theft.
- Should be insured against loss.
- A warehouse should have a good transport network leading to it.
- It should have good facilities e.g refrigeration for storage of perishable goods.
Organization of a warehouse
Warehouses are organized according to the quantity and nature of goods to store. Some warehouses are so big and have several departments. A typical large warehouse would have a general manager and of the following department;
- Purchase department
This is headed by a purchase manager responsible for buying stock for the warehouse. This department is concerned with the following;
- Placing orders for goods needed in the warehouse
- Looking for cheap sources for the supply of goods
- Accessing the changes in fashion and taste
- Sales department
This department is headed by a sales manager or marketing officer who ensures that the goods stocked will have a market. The department is responsible for the following;
- Carriers out sales promotion strategies
- It receives orders from buyers and ensures that goods ordered are dispatched
- Handles customers’ complaints
- It ensures that the goods required are available
- Transport department
It is headed by a transport offer that ensures the effective distribution of goods. The department is concerned with;
- Moving goods from suppliers to the warehouse
- Delivering goods for buyers who purchase in large quantities
- Ensure that the necessary vehicles are available.
- Account department
It is headed by the finance manager or chief account and it is responsible for;
- Handling the budget for the warehouse
- Prepare invoices and financial statements
- Prepares and keeps financing records
- Legal department
It is headed by a accompany secretary or legal officer. It handles legal procedures and legal documentation of the warehouse such documents include; insurance policies eg the certificate of incorporation.
The legal department insures that there is a good relationship with the general public and the warehouse.
- General administration department
The warehouse is headed by a board of directors under a skilled chairman. Under the board, there is a managing director or general manager. General Manager is in charge of general administration.
ORGANIZATION OF A WAREHOUSE
Types of warehouses
- Private warehouse
They are operated by business firms or entries for their own use. They are either wholly-owned or can be hired either to manufacturers, wholesalers, retailers, retailers, etc and are usually located near manufacturers premises.
- Whole sellers warehouses
They are owned by whole sellers and they store and handle goods of par particular whole-sellers, these are normally large stores because whole sales handle large stocks of goods and store seasonal goods to ensure a seasonal supply (steady flow).
They are located near wholesales shops or they may be part of whole sellers’ premises.
- Manufacturers warehouses
These are owned and operated by manufacturers to store raw materials and goods produced by the manufacturer.
They may be located near the factory, near the market or at any convenient part/point to enable the marketing of the goods.
These are not very large because whole sales normally collect goods from the manufacturers immediately they are produced.
- Public warehouses
A public warehouse is either owned by individuals for a private firm or government. It carries out warehousing as a business. It is called a public warehouse because it is open for use by any members of the public either to hire or to rent.
Public warehouses are located in strategic places like terminals ie at seaports, airports, railway stations, loading and unloading points etc.
Benefits of public warehouses
- In a public warehouse, goods can be branded, blended and prepared well in a warehouse
- Inspection of goods can be done so that any damage is dealt with accordingly and immediately.
- Goods may be marketed while in the warehouse.
- It gives time to the businessman (importer) to collect money for the duty or tax.
- The businessman is also able to find transport means for his goods while they are under safe custody.
- Storage is also to protect goods against bad weather conditions and pests etc.
- Bonded warehouse
This stores dutiable goods ie goods on which duty or tax are to be paid. Goods are pending customs payment. They are kept by government officials but do not necessarily belong to the government.
They are not very large warehouses and if goods are sold in bond, they are sold while on a bonded warehouse.
The customs duty is then shifted to the buyer. Goods can also be packed, processed, pleaded and marketed in a bounded warehouse.
Importance of warehouses to traders
- Goods can be advertised and prepared for sell while in a bonded warehouse ie they can be repacked, blended and branded.
- Goods can be broken into small quantities if the owner cannot raise enough money to pay the whole amount of tax.
- An importer decides to re-export the goods are in bond some goods lose weight while in storage which reduces their tax if it is based on weight.
- For the government bonded warehouses, ensure that no taxes are evaded.
- Enables govern to check for smuggling of goods and importation of prohibited goods. This is because goods are physically checked in bonded in b warehouses. This chocking when customs officials conduct a search esp. on a ship with the aim of finding dutiable goods is technically called
- It enables the government to collect taxes easily and economically.
The government may make a partial or full refund of customs duty to the importer who imports them as finished goods. This is what is referred to as customs drawback.