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Unit 12: Warehouse Management

12.1 Functions of Warehouse Notes

The Basic function of a warehouse are movement of goods storage of goods, and information
management.

1. Storage of Goods: One of the traditional requirements of a warehouse has been for storing
goods. The warehouse provides the space required for such storage and it is one of the
important functions of a warehouse.
Warehouse performs two types of storage: planned and extended.
(a) Planned Storage: Storage required as planned to meet the regular customer demand
is called panned storage, Every inventory in received in the warehouse requires
storage for a certain period of time. The duration of storage many vary.

(b) Extended Storage: Extended storage is an inventory in excess of normal warehouse
operation. Some of the reasons for extended storage requirements are seasonality in
demand, erratic demand, product conditioning, speculative purchases, discounts,
etc.
To meet the erratic or seasonality in demand an additional storage of goods in terms of
safety stocks could be required.
Some products such as food items may be stored for conditioning purposes e.g. ripening
of fruits.
Sometimes a firm may buy bulk quantities to avail of the discounts that are available or to
purchase when the price is low. This is speculative purchases as the goods are bought at a
higher quantity due to lower price or due to expectation of higher price in the future.
Sometimes due to promotional campaigns such as sales promotion, additional stock may
be required to be kept to meet the expected higher demand for the product.

2. Movement of Goods: Movement of goods consist of inbound activity (unloading of goods
brought to warehouse), transfer to storage (transferring the goods from the inbound area
to the storage area), order selecting (selecting the good in the storage as per order to be
shipped and transferring it to shipment area) and outbound activity (checking and loading
the gods for shipment).
3. Information Management: Keeping a track of information regarding goods that have
come into the warehouse, stored and that are shipped out of the warehouse. Also any
other information pertaining to the warehouse is stored. The data captured by the
information system in the warehouse is then passed on to the higher management in
order to take better decisions.

Secondary Functions of a Warehouse

4. Protection of goods: A warehouse provides protection to goods from loss or damage due
to heat, dust, wind and moisture, etc. It makes special arrangements for different products
according to their nature. It cuts down losses due to spoilage and wastage during storage.
5. Risk bearing: Warehouses take over the risks incidental to storage of goods. Once goods
are handed over to the warehouse-keeper for storage, the responsibility of, these goods
passes on to the warehouse-keeper. Thus, the risk of loss or damage to goods in storage is
borne by the warehouse keeper. Since it is bound to return the goods in good condition,
the warehouse becomes responsible for any loss, theft or damage etc., thus, it takes all
precautions to prevent any mishap.

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