1) What is the role of the warehouse storage system in the order fulfillment process?

Importance and Benefits ofWarehousing✓ Centralized Storage Location

✓ Enhanced Inventory Management

✓ Better Order Processing

✓ Additional Storage

✓ Price Stabilization

✓ Excellent Customer Service

✓ Better Risk Management

To satisfy customers, it is essential for all eCommerce businesses to rely on a properly laid out
warehousing strategy. The goal of any business is to be profitable, and warehousing is an essential step in
that. When you sell physical goods, you need a place to store, package, and ship them. That is where
these warehouses come to your rescue. A warehouse will make it possible for you to manage your goods
well and thus, run your business efficiently and hassle-free.

1. Centralized Storage Location

A warehouse in a logistics system will work as a centralized storage location for keeping all your goods or
products. It means that you can receive, store, and then distribute or ship products all from one location.
This will ease things for you as everything is in one place. Not just that but this will also save you a lot of
time and cost. Choose a location that makes sense keeping your operations in mind. While for some
businesses a warehouse near a dock is ideal, for others it could be in the middle of a city. Make sure that
your location enables you to perform all your functions of receiving, storing, and shipping without any
hassle.

2. Enhanced Inventory Management

Keeping all your products stocked in a warehouse will enhance your inventory management. Not having
an inventory or not tracking it well will lead to delayed shipments and order processing, and a poor
customer experience. Since a warehouse serves as a centralized location for your goods, tracking and
managing your inventory becomes easier. This will enable you to leverage your inventory control and
keep track of your products, remove irrelevant ones, and know when something is out of stock. Imagine if
you didn’t have warehousing services then how difficult it would be to keep track of your goods. It would
be absolute mayhem trying to keep everything in order without a proper warehouse.

3. Better Order Processing

One of the best benefits of warehousing in the logistics system is that your order processing is improved.
Every time a customer places an order with your business, he/ she expects a timely and smooth delivery
process. So, it is basically your task to ensure that the products reach your customer right on time and
that they do not face any issues during the entire process. Warehousing will ensure fast turnarounds by
eliminating lag time. If you have warehousing services, you will have all your stock ready in one place.
 You wouldn’t have to run to your production unit to get it and this, in turn, will improve your order
processing. As a business owner, the last thing you want is to lose a customer just because you couldn’t
fulfill an order.

4. Additional Storage

What’s more, is that warehouses also function as additional storage units for you. It is the safest way of
storing not just your manufactured goods but also raw materials and other things that are required for
production. While you can also use your production unit for storage, large stock volume scan easily
outgrows it. So, it is always a good idea to have that extra storage space at your disposal. As a business
owner or manufacturer, having a storehouse is extremely essential if you wish to carry out all your
processes smoothly. So, keep in mind that a warehouse will do a lot more for you than just storing your
manufactured goods.

5. Price Stabilization

Another one of the best benefits of warehousing is that it ensures prize stabilization. The demand for
certain products changes from season to season or from year to year. There are several factors that
determine the demand for a certain product. While some products have a high demand in the rainy
season, others sell like hot cakes in the winter season. Having warehouse services of your own will ensure
that you can easily store your products for a later date. Without a proper warehouse, you will be forced
to sell your products at cheaper rates once the season ends. Price stability is one important factor that
warehousing guarantees.

6. Excellent Customer Service

Having a warehouse in a logistics system ultimately contributes to excellent customer service. A smooth
delivery process is something that your customer stake into consideration before making a purchase from
you. Warehousing ensures that your deliveries are timely, and the overall distribution of your products is
optimized. It also helps in reducing errors that are caused during the order fulfillment process.

All in all, excellent customer service is a by-product of warehousing.

7. Better Risk Management

Finally, warehousing also offers you improved risk management. Whether it is price fluctuations or
storing perishable products, warehousing takes care of it all. Moreover, your products also have
minimized chances of being affected by any damages or theft. As products in a warehouse are usually
insured, you are in a safe spot with warehouse services.

2) Discuss the importance of storage or shelf space in the warehouse storage system as
in any brick-and-mortar store.
For years, warehouses have played a significant role in the smooth functioning of the supply chain.
Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, e-
commerce businesses and more. Warehouses accomplish the essential function of storing goods along
with services that ensure better control over inventory, from the time they are produced to the time they
reach the consumer market.
✓ Logistics comprises three primary functions that are: transportation, distribution, and warehousing.
Warehouses allow businesses to have maximum inventory control as they act as a centralized location
that makes it easier to pick, distribute and transport goods to desired consumption centers. Warehouses
also provide businesses with economic benefit, efficient storage and logistical operations help to reduce
transportation costs, shipping costs, order delivery costs and more.

✓ Warehouse storage is that vital component in the supply chain that maintains a balance between
demand and supply by acting as a buffer. Warehouses are of different types, and each serves different
purposes.

Types of Warehouses General Warehouse Storage

✓ Warehouses have evolved from basic godowns to organized spaces with state-of-the-art infrastructure.
However, the modern era has an increasing demand for organized warehouses that facilitate optimal
storage of inventory and assure quality and consistency to businesses. General warehouse storage
provides an accumulation of goods at one place which imparts efficiency in the overall logistics system.
General warehouses store inventory in various ways that range from floor storage, semi-automatic shelf
racking, automatic shelf-racking, manual/robotic storage systems and more. Bonded Warehouse Storage
✓ By definition, bonded warehouses are "customs-controlled warehouse storage for the retention of
imported goods until the duty owed is paid. "Bonded warehouses can be government-owned or privately
owned. The primary function of bonded warehouses is to store bonded goods until customs duty is paid,
or when the dutiable products are out of the warehouse. Bonded warehouses allow importers to handle
temporary liquidity crunch, as no duty is paid until goods are released – giving complete control of
payment to the importer. Bonded warehouse facilities also offer importers with other logistics solutions,
along with various storage systems to best meet business requirements. Fulfilment Centers

✓ The term 'fulfilment' refers to the process of fulfilling customer orders via third-party logistics
providers. Fulfilment centers are order processing warehouses that are located close to customers. With
the rise of the e- commerce industry, fulfilment centers have become a vital part of the supply chain and
aid activities such as order management, picking,

packing, returns control and more. Although e-commerce businesses utilize fulfilment centers
dominantly, they're becoming an essential component for manufacturers, retailers, wholesalers, and
distributors as well.

✓ There are different storage systems incorporated at warehouses. These storage systems aim at the
accessibility of inventory and efficiency of operations. At a broader level, types of storage systems are.
Types of Storage System
✓ Pallet Racking System: is the most common storage system implemented at warehouses. Loaded
pallets are stacked on racks in horizontal rows with multiple levels. Warehouses use pallet racking
systems due to the austere simplicity of installation and the organization of storage space. It is always
better to install racks, as it manifests space utilization two-folds and is cost-effective in comparison to
adding a square foot of storage space at warehouses. Stacking: is a form of floor storage at warehouses
and is the process offloading one pallet over the other. Stacking can be categorized into single stacking,
double stacking, or block stacking. Stacking is the storage at the grassroots and doesn't require
installation of any material handling equipment such as racks or shelves. Warehouses globally utilize
stacking due to its low setup costs, flexibility, and the ability to exploit vertical space. Proper MHE
(machine handling equipment) ensures safe handling of pallets and lanes are created to assure access to
different stock keeping units (SKUs). Pallet-less Stacking: is the most traditional stacking technique that
doesn't include the utilization of pallets. Rather individual cartons or boxes are stacked one over the
other. Pallet-less stacking is still a prominent storage system executed at godowns. Expensive goods such
as automobile engines are stored without pallets, directly on floors that ensures required access to the
product and complete safety. Pallet-less stacking always remains as a natural storage system at
warehouses as no investment is required.

In the past decade, warehouses have been a centralized and reliable spot for the storage of inventory,
and hence, businesses have preferred opting for warehouses as long-term fixed assets. Although the
current market is experiencing invariable demand, and therefore, it is difficult for companies to predict
the inventory levels required to maintain at warehouses. Inventory Overflow

✓ Globally, businesses are dealing with seasonal peaks in demand. According to Warehouse Capacity
Economics and Trends, 74% of retailers face the challenge of fluctuation in demands throughout the year.
✓ Inventory overflow is the overstocking of goods at warehouses to meet fluctuating demands
successfully. At warehouses, the slow-moving SKUs results in crowded aisles and disorganized warehouse
space that decreases the operational efficiency.

✓ In such situations, warehouses become victims of 'honeycombing'. Honeycombing is a bunch of slow-

✓ Short-term warehousing is gaining recognition worldwide by various leading businesses and industry
experts that allows brands to recruit an off-site location for slow-moving SKUs while making way for the
top- selling products at the distribution center.

✓ Corporations claim that seasonality is the most significant driver of inventory variations and supply
chain disruptions. Even though long- term contracts and fixed assets make businesses feel in control of
the inventory. Once the seasonality in demand surpasses; enterprises are left with spare storage space
that generates no revenue.
✓ Apart from seasonality in demand, there can be other challenges that disrupt supply chains such as
trade conflicts and worldwide pandemics, the latest example of which is COVID-19. In May 2019, the
trade conflict between the U.S. and China cost businesses and consumers $3 billion through higher prices.

✓Often, small and mid-sized companies are critically affected by increasing trade conflicts as they lack the
storage capacity to cope with rising inventory costs and supply disruptions.

✓ Not only in terms of money but a significant loss of time is experienced by SMBs as they also lack the
funding and expertise to redirect supply routes to avoid tariffs.

✓ On the other hand, situations like COVID-19 which led to lockdowns innovations and shut down of
trade routes, transport routes and unavailability of staff members.

✓ It is often challenging to predict inventory levels during such situations and stay prepared to handle
such disruptions.

✓ The e-commerce industry is experiencing a surge in demand as quarantined customers are left with no
option but switch to 'panic- buying', order products online and have them delivered at their doorsteps.

✓ Proclaimed players like Amazon and Walmart with an extensive network of distribution centers and
warehouses are highly agile and prepared to have their businesses operating at times of unpredictability.

✓ It is small and mid-sized businesses that require to be responsive and antifragile. On-demand
warehousing is a concept that gives complete flexibility to companies to increase or decrease inventory
levels they maintain at warehouses without clinging on to long-term contracts and fixed real estate that
only locks up cash.

✓ Businesses can ramp up inventory levels beforehand by storing additional stock in case of future tariffs
surge, restrictions, lockdowns and delays while staying free from product shortages.

✓ The best way to solve supply chain disruptions isn't to buy or lease more capacity - it is to find the
space you need to address and tackle existing short-term problems.

✓It's undeniable that retailers and businesses might require more storage space than they already have.
A company might be dealing with seasonal demands, expansion plans into a new market, introduce new
products, out-of-sync demand planning and supply chain or unpredictable trade conflicts and global
issues such as COVID-19.

✓ In such cases, rushing to find additional warehouse space is not only challenging but also expensive and
disruptive to business activities.