Why every business must have a warehouse.
It has been quite a long time since businesses have used the system of warehousing for various storage needs. But today, the need for a warehouse extends beyond just storage needs. A warehouse is a very crucial aspect of supply chain management. In reality, there exists a time gap between production and consumption of goods. A warehouse bridges this gap and creates time utility. But, what is the importance of a warehouse to a business?
- Storage of surplus goods: Sales may be subject to seasonal variations but production must go on continuously. And for production to continue, the surplus goods need to be stored which are not instantly needed. A warehouse serves this purpose and stores the surplus goods for future demand and supply.
- Stabilization of prices: A warehouse stores goods when their supply is more than their demand and releases such goods when their demand exceeds current production. Thus, a warehouse ensures that goods are supplied regularly in the market and prevents severe fluctuations in prices.
- Reduction of risk: Warehouse can store goods safely. This saves a businessman from compensating for losses due to fire, theft, natural disasters, etc.
- Packing and grading: A modern warehouse offers all the necessary services of packing, grading, blending, etc.
- Financing: The owner of the goods can raise loans from the warehouse keeper against them. He or she can also raise loans from financial institutions against warehouse receipts.