A warehouse is exactly what you think it is — a place to store inventory. Any goods purchased from manufacturers, importers, exporters, wholesalers, or customs will be stored here first before being shipped to another location for fulfillment. Quite a number of industries take advantage of warehouse services in order to run their business efficiently and seamlessly.
In practice, a warehouse service is much more than that. Let us take a closer look on why many companies utilize warehouse services as their systematic logistic management.
Central Storage Space
A warehouse is an ideal place for the centralized location storage space because it is built with large square footage and is fully equipped to receive, store, and distribute goods. A company may decide to consolidate all of their inventory into one warehouse or a few major hubs to cover a wide region.
This helps alleviate the production gap because this single inventory management system ensures that tracking and tracing items are much easier and save time. While at the same time, the operation cost for the company will be reduced when there is no need for cost allocation for utility, rent, material handling, and personnel.
Thus, retailers can now more easily set pricing strategies — thanks to these cost savings and the improved stability of their inventory management. Higher profit margins and offering lower customer prices will be possible to implement.
Enhanced Inventory Control
Getting to keep better control of the product quantity is one of the primary reasons why companies store goods in the warehouse. Everything is kept in a systematic way so that the company has the preset stock level ready to fulfill consumer demand without over-purchasing or having not enough stock.
Warehouse services usually has a system to track and monitor inventory, which will also allow to plan future purchases by getting profit from the current stock. Therefore, if some products are running out of stock, the company will be well aware immediately so they can offer customers alternatives rather than making them wait for days or weeks for that particular product.
The efficiency of the warehouse tracking system has made it easier to collaborate with suppliers and vendors to minimize the amount of damaged or low-quality products. It also allows the timely removal of products from the warehouse by enabling the monitoring of shelf life and expiry dates for various products. Actually, there is a term for this — first in, first out (FIFO).
Faster packing, shipping, and delivery
Whatever product the company is selling, customers’ main concern is definitely a swift and timely delivery. And by taking full advantage of the systematic stock-keeping system in the warehouse, products will always be ready for shipping every time a customer places an order. This creates buying assurance for them because time wastage usually happens when the customer buys the products directly from the production facility.
Delivery delays undoubtedly frustrate customers. Thus, having security stocks at the warehouse that hold supplies for months will do the trick in minimizing the issue. Since warehouses are equipped with supplies and facilities to store, move, pack, process, and distribute the products — getting scheduled and streamlined deliveries can be achieved most of the time.
This leads to saving time and money while eliminating the need for pick-up arrangements and hiring staff to handle fulfillment. And when customers can expect a quick turnaround, the company will probably win repeat business from them.
Better Risk Management
Radical price fluctuations in the market are something feared by all. This situation will occur when there is a temporary difference between what providers are supplying and what consumers are demanding. And if the product has a considerably higher supply than demand, selling at that time may result in substantial losses.
That is why storing goods in the warehouse during that time is a wise approach rather than proceeding to sell them when fewer people are buying. This will protect the company from loss and help stabilize the market. When the market’s demand for that particular product increases, you can start selling them again.
Besides, easily spoiled goods can be safely kept because a warehouse is equipped with facilities such as cold storage, refrigeration, shelving systems, and several others that can prevent product damage or spoilage. Also, keeping goods in the warehouse will prevent you from running out of stock in the event of an accident such as fire or theft.
Extra Storage Space
Even if the company has storage space in their manufacturing or operation facility, it might not be enough when things get hectic. In these situations, a warehouse will come in handy by offering the safe storage of the items. Thus, keeping the surplus product in the warehouse will eliminate crowding in the company facility while providing ample space for other purposes instead of storing the product in a less-than-ideal environment.
Most businesses typically produce goods in excess because they want to anticipate demand. This means a storage facility is required until clients and customers begin placing orders. Hence, the warehouse is the best option for convenient transportation while meeting all storage needs.
Besides, warehouses are mainly located in locations with ease of access such as close to a road, airport, rail station, or waterway to seamlessly accommodate the movement of goods.
The Bottom Line
All the costs associated with storing products or goods in a warehouse are varied. There are basic storage fees that include pallet storage pricing, cubic footage pricing, and square footage pricing (3PL). This storage fee is usually billed monthly, although some companies opt for bi-monthly, weekly, or even daily fees.
There is also a cost associated with in and out fees for basic warehousing Malaysia services such as fulfillment service. But bear in mind that this fulfillment service is not as straightforward. Fulfillment pricing is made on an activity-based, pay-per-use basis. Very few fulfillment centers charge a flat rate or a percentage of sales basis. Oftentimes, the charge is based on the services they provide for you during the month.