Warehousing

• Warehousing stores goods until they are wanted. Its functions: links with seasonal production and seasonal demand, protecting supply, price stability and logistics postponement.
• Four types: bonded (imported goods stored before customs duty is paid), cold storage (perishables kept chilled or frozen), cash and carry (a wholesale warehouse where retailers pay and take goods away) and regional distribution centres (a large retailer’s central store serving its shops in one region).
• Automation in warehousing: robotics, automated sorting and voice picking.
• Benefits of automation: lower labour costs, less human error, improved picking accuracy, improved inventory control and improved customer service.

Why goods are stored

Warehousing is one of the aids to trade and an element of logistics. It removes the barrier of time: the gap between when goods are made and when they are bought.

Worked example: steady supply from a seasonal harvest

A cooperative harvests 1,200 tonnes of rice once a year and sells the same amount each month. Calculate the monthly release and explain how the warehouse helps price stability.

Monthly release = 1,200 ÷ 12 = 100 tonnes

Without storage all 1,200 tonnes would reach the market at harvest, pushing the price down, and none would be available later in the year, pushing it up. Releasing 100 tonnes a month keeps supply, and so the price, steady.