WAREHOUSING COMPLETE NOTES

Def.: is the storage and distribution of raw materials, manufactured goods and personal goods
until they are wanted for use.
It is a building used to store goods before distribution or use. The use of warehousing has
enabled the production of goods ahead of demand.
Importance of warehousing
Warehousing is an important aid to trade.
 For mass production - Manufactures keep their raw materials, consumables and
finished goods in warehouses, which facilitates mass production.
 Nature of commodities - Perishable goods are preserved for longer periods in
refrigerated cold rooms and flammable fuels are kept in tanks for safety.
 Seasonal products - Crops, vegetables and fruits are kept in warehouses to extend the
availability of these products to when they are not in season.
 Proximity to production centres – Goods required for production are kept in
warehouses near production centres so that the production factories can get their
supplies quickly.
 Minimising price fluctuations – A constant and regular supply of particular goods
reduces a shortage of those goods, keeping prices from fluctuating.
 Surplus goods - Instead of flooding the market with goods, the surplus is removed
from the market and kept in a warehouse for future supply.
 Security issues - Warehouses reduce the theft of goods from places that are open to
workers.
 Display of goods - Some goods, such as electronic goods, are kept in warehouses and
only examples of the goods are displayed in the stores.
 International trade - Some imported goods are kept in warehouses before customs
duty is paid on them.
 Buffer stocks - Warehouses are used to hold minimum stocks levels of certain items
to protect them from shortages that might occur.
 Preparation for sale - Traders can sort, pack and label goods before selling them to
customers.
 Improving some goods - Some goods such as cheese, tobacco and wine are kept in
warehouses until their quality or taste improve.
Types of storage systems
There are many different types of warehouses, these include:
 Cold storage, which is used to keep perishables such as meat, fish, vegetables and
milk until they are distributed
 Fuel tanks, which are used to keep petrol, diesel, paraffin and aviation fuels
 Grain silos or well-ventilated dry places, which are used to store grains such as maize,
rice, wheat and many other grains until they are wanted.
Indigenous storage systems

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  People have always used specialised storage places to store household and personal
goods until they are required. In Zimbabwe, indigenous storage systems are:
 Used to store harvested crops
 Commonly found in rural and resettled areas
 In ventilated and dry places
 Often built on raised ground to prevent moisture getting into the crops
 Grass thatched for more ventilation
 Compartmentalised to store different crops, such as grams and legumes
 Kept under lock and key to prevent the crops from being stolen.
Indigenous storage systems:
 Prevent shortages
 Store seasonal goods up to the next season
 Prevent price fluctuations
 Are used as status symbol for hurudza (the experts in fanning), who usually have a big
dura make crops available throughout the year.
Importance of warehousing
 Proximity to production centres – Goods required tor production are kept in
warehouses near production centres so that they can be supplied to production
factories on a regular basis.
 Minimise price fluctuations - A constant and regular supply of a particular good
reduces a shortage, which may result in high prices.
 Surplus goods - Instead of flooding the market with goods, the surplus is removed
from the market and kept in a warehouse for future supply.
 Security issues - Smaller warehouses reduce pilferage and theft of goods from places
that are easily accessible to workers or large groups of people.
 Display of goods - Some goods, such as electronic goods and cars, are kept and
displayed in warehouses before sale.
 International trade - Some goods are kept in warehouses before customs duty is paid
and the goods are permitted to enter or leave a country.
 Buffer stocks - Warehouses are used to hold minimum stocks to reduce shortages of
essential items, like mechanical parts for big machines used in the manufacturing
industries.
 Preparation for sale - Traders can sort, pack and label goods before selling them to
customers.
 Conditioning some goods - Some goods, such as cheese, tobacco and wood, are kept
in special warehouses until their quality, taste and durability are achieved.
Functions of warehousing are:
 to keep perishable goods until they are distributed
 to keep raw materials, consumables and finished goods
 to store goods from a variety of manufacturers
 To blend, grade, package and brand good,
 To store goods that are in transit
Warehouses for primary producers

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  It is a warehouse that keeps perishable goods, such as meat, fish, milk and vegetables,
until they are distributed.
 These types of warehouses also make it possible to keep fruit and vegetables longer
and even artificially ripen fruit and vegetables. This method ensures that seasonal fruit
and vegetables can be bought throughout the year.
Warehouses for manufacturers
 The warehouses for manufacturers are used for keeping raw materials, consumables
and finished goods. This enables the manufacturer to keep on producing goods when
there is less demand. These warehouses are located in production factories.
Wholesaler warehouses
 Wholesaler warehouses are used to store a variety of goods from different
manufacturers. The goods can be blended, graded, packaged and branded at these
warehouses. These warehouses help to steady the prices of goods and to prevent
shortages of goods on the market.
Transit warehouses
 Goods that are being transported from one place to another are stored in transit
warehouses awaiting distribution to retailers and consumers.
Retailer warehouses
 Retailer warehouses store goods from a variety of wholesalers and manufactures. The
goods are packed and branded in the retailer's brand name before being transported to
the retailer's branches.
Barcoding in warehousing
 Bar codes can be used to track each product in the warehouse. Each product has a
unique barcode.
Advantages of barcoding
 There is a decrease in clerical costs because manual entries are eliminated.
 There are fewer errors due to improved inventory tracking and verification of items.
 There is increased inventory accuracy.
 It improves worker efficiency.
 It improves the scheduling of warehouse activities.
 It helps businesses identify products in the warehouse.
 A bar code can assist with tracking the full life cycle of fruit and vegetables for
example, a bar code on a box of apples arriving in the UK from South Africa will be
able to provide a full history of:
 the farm it came from
 how much pesticide was used on it
 how long it was in cold storage
 when it was packed
 when it left the South African harbour
 The date it arrived in the UK.

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Types of warehouses
Warehouses can be classified according to ownership in the following ways;
 private warehouses
 public warehouses
Private warehouses
 Prevail warehouses are owned by large-scale manufacturers, wholesalers and retailers
who bear all the risks of loss through wastage, spoilage, obsolescence, and pilferage.
The following are examples of private warehouses:
Manufacturers' warehouses
 These warehouses are located in Industrial areas. They are owned or rented by
manufacturers for the storage of:
 Raw materials
 finished goods awaiting demand
 partly finished goods
 Equipment and spares.
Manufacturers' warehouses have the following functions:
 Manufacturers' warehouses are used for keeping raw materials, consumables and
finished goods.
 They enable goods to be branded and packed.
 They help to clear production lines. This helps the manufacturer to keep on producing
goods when there is less demand

Wholesalers’ warehouses
These are warehouses that are owned and rented by the wholesalers and allows the storage
of:
 Goods, sizes and quantities and the goods will be from manufacturers
 Goods in bulk
 Seasonal goods
 Goods awaiting demand
Functions of wholesalers’ warehouses
 They enable goods to be graded, packed, and blended and to be branded.
 They allow goods, such as wine, fruit, and tobacco to mature, which enables regular
consumption of these foods.
 A constant regular supply of goods prevents shortages of those goods.
Retailers' warehouses
 These, warehouses are owned by retailers, such
 as supermarkets and department stores, for the storage of:
 a variety of goods from various wholesalers or manufacturers

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  goods for distribution to branches
 Equipment and machinery.
 Retailers' warehouses have following functions:
 Goods in these warehouses are used to replenish stock in the shop. These goods are
then sold,
 Goods can be packed, branded or blended while they are in the retailers’ warehouse.
Primary producer warehouses
 These are specialist warehouses for primary
 Products such as grains like maize, wheat and rice, tobacco, fruit and vegetables and
wine.
Grain silos
 Grain silos are well-ventilated dry places that are used for storing grain. They are
usually run by
 Grain. Marketing Board and have the following uses:
 they enable the grading and pre - packaging of grains
 Imported grain is stored in grain silos to prevent shortages.
 They help to stabilise the prices of grain.
Cold storage warehouses
 Cold storage warehouses- have refrigerated facilities and are used to store perishables,
such as vegetables, fruit, meat and dairy products.
Wine cellars
 These are large underground rooms located near Vineyards, which helps to reduce
transport costs. They have the following uses.
 They store wine in bulk
 The storage of wine gives it time to mature.
 The storage of wine steadies the prices for wine.
 It evens out the flow of wine.
Tobacco auction floors
 Tobacco is graded and stored on tobacco auction floors until sale. These are useful
places for these reasons:
 They allow the packing of tobacco into bales
 Storage steadies the prices of tobacco.
 They allow the tobacco to mature, which improves its quality.
Public warehouses
 These are run by parastatals and local government authorities. They store goods that
are waiting to be distributed e.g.
 Building materials
 Medical drugs
 Machines
 Spare parts

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  Raw materials
 Water
 Fuel
 Stationery
Bonded warehouses
 Are licenced by the government. They-ace located at ports border posts and in big
cities. They are permitted to hold goods under bond until the duty is paid. Goods are
released after duty bas been paid. A customs warranty is Issued when duty has been
paid and provides permission for goods to be released,
Bonded warehouses have the following advantages,
 Goods can be sold whilst in bond.
 -Goods can be sold 10 Small quantities, 'which saves on working' capital.
 While in bond; goods can be graded, packed and tinned or bottled, but not
manufactured.
 Goods are allowed to mature in these warehouses.
 Goods ate stored in bonded warehouses for entrepot trade.
Location of a warehouse
 There are a number of factors that influence the location of warehouses. These
include:
 The cost of building a warehouse
 The distance to and from suppliers e.g. manufacturers and wholesalers
 The proximity to customers.
 Government policies
 Transport and communication networks
 Security
Government influence and policies
 The government plays a big role in the decision of where a warehouse is to be located
through its influence and its policies. The fol1owfug factors influence where a
warehouse is situated:
 The availability of transport, e.g. road and rail
 the availability of communication links, such as telecommunication networks
 the availability of power and the water supply
 The availability, of land.

Management perspectives vary hence some prefer to locate the warehouse close to schools,
hospitals or other resort areas. A cost-benefit analysis is always wise to undertake as you call
then weigh-up the advantages and disadvantages of locating a warehouse in a certain area.
NB// - cost-benefit analysis – this is a process of assessing the costs incurred if a particular
decision is made and the pros and cons, this enables management to make the wisest
decisions

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WAREHOUSING POSSIBLE QUESTIONS
� Explain warehousing
� identify indigenous storage systems
� Assess the importance of warehousing
� Describe the functions of warehouses:

 Private, Manufacturers, Wholesalers, Retailers, Public, Bonded

� categorise warehouses into private and public
� Analyse factors considered when locating a warehouse
� Explain tire importance of a bonded warehouse.
� Discuss the factors that influence the location of a warehouse.
� Explain the importance of warehousing to the following:

 Wholesalers
 Large-scale retailers.

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