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Retail Business Environment

Notes 6. Financing: When goods are deposited in any Warehouse, the depositor gets a receipt,
which acts as a proof about the deposit of goods. The Warehouses can also issue a document
in favour of the owner of the goods, which is called warehouse-keeper's warrant. This
warrant is a document of title and can be transferred by simple endorsement and delivery.
So while the goods are in custody of the warehouse-keeper, the businessmen can obtain
loans from banks and other financial institutions keeping this warrant as security. In some
cases, warehouses also give advances of money to the depositors for a short period keeping
their goods as security.
7. Processing: Certain Commodities are not consumed in the form they are produced.
Processing is required to make them consumable. For example, paddy is polished, timber
is seasoned, and fruits are ripened, etc. Sometimes warehouses also undertake these
activities on behalf of the owners.
8. Grading and branding: On request warehouses also perform the functions of grading and
branding of goods on behalf of the manufacturer, wholesaler or the importer of goods. It
also provides facilities for mixing, blending and packaging of goods for the convenience
of handling and sale.

Example: Haryana Warehousing Corporation: Panipat
Haryana Warehousing Corporation was set up on November 1, 1967 under the Warehousing
Corporation Act, 1962. It carries out the following functions at large:
(a) Acquire and build godowns and warehouses at such places within the State as it may, with
the previous approval of the Central Warehousing Corporation.
(b) Run Warehouse's in the State for storage of agricultural products, seeds, manures, fertilizer,
agriculture implements and other notified commodities.
(c) Arrange facilities for the transport of agricultural produce, seeds, manures, fertilizers
agricultural implements and notified commodities to and from warehouses.

(d) Act as an agent of the Central Warehousing or of the Govt. for the purpose of purchase,
sale, storage and distribution of agricultural produce, seeds, manures, fertilizers, agricultural
implements and notified commodities.

12.2 Warehousing Planning and Cost Reduction

Strategic Warehousing Logistics planning has become a means to competitive advantage. It
permits the organization to align the operations with overall business objectives. Such a network
has various objectives such as, speeding the supply of the products and thereby, speeding the
cash flow.

Warehousing enhances the time and place capability of the overall logistical system. Nonetheless,
it has to be fully justified on a cost-benefit basis. This justification can be quantified by the return
on investment reflected in the direct cost-to-cost trade-off. For example, if adding a warehouse
to a logistical system reduces overall transportation cost by an amount exceeding the fixed and
variable cost of the warehouse, the warehouse is economically justified. This means that total
costs have been reduced.
From the service point of view, logistics planning in warehousing helps to ensure a high level
of growth in the revenue for all the companies involved in the chain. It enhances customer
loyalty through commitment and competence. It provides options to keep costs as low as possible,
while maintaining excellent customer service. The five basic benefits achieved through
warehousing from a service point of view:

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