After reading this essay you will learn about:- 1. Meaning of Warehouse 2. Characteristics of a Warehouse 3. Functions 4. Advantages/Importance 5. Kinds 6. Benefits/Services.
Essay on Warehouse
Essay Contents:
- Essay on the Meaning of Warehouse
- Essay on the Characteristics of a Warehouse
- Essay on the Functions of Warehouses
- Essay on the Advantages/Importance of Warehouses
- Essay on the Kinds of Warehouses
- Essay on the Benefits/Services of Warehouses
Essay # 1. Meaning of Warehouse:
Warehousing is an important function of commerce. It creates time utility and removes the hindrance of time. Warehousing may be defined as the assumption of responsibility for the storage of goods. A warehouse is a place used for the storage or accumulation of goods in proper condition from the time they are produced until they are needed by consumers.
According to Stephenson, “A warehouse is an establishment for the storage or accumulation of goods.”
According to S.S. Chatterjee, “If transporting and advertising are designed to widen the market, then storage must be taken for deeping the market.”
From the above meaning and definitions of warehousing we come to the conclusion that “Warehousing refers to the arrangement by which goods are stored when they are not immediately needed and are kept in such a manner that they are protected from deterioration.”
Storage of goods is necessary throughout the marketing processes. By preserving goods from the time of production to the time of consumption, it ensures the continuous flow of goods to the market.
Essay # 2. Characteristics of a Warehouse:
Following are the chief characteristics of an ideal warehouse:
(i) Sufficient Space:
Warehouse is a place used for the storage or accumulation of goods. Thus it requires a sufficient space to store maximum goods. Insufficient space is a hindrance in the future development of trade.
(ii) Safety:
Warehouse should be established at that place where there is no possibility of deterioration of goods. In other words, they should be built strong to be safe from pilferages, theft, dacoities, rain, dust, sun, and natural calamities.
(iii) Proper Supervision:
Warehouses should be properly supervised to avoid the possibility of deterioration of the goods.
(iv) Near to the Means of Transport:
Warehouses should be established at that place where there is facility of means of transport.
(v) Easy Approach:
Warehouses should be established at that place where buyers and sellers and other related persons (as middlemen) may reach conveniently.
(vi) Economy:
Warehouses should be properly managed so that goods may be stored economically. This is possible only if there is a full utilisation of space.
Essay # 3. Functions of Warehouses:
Important functions of warehousing are listed below:
(i) Storage of Good:
The basic function of warehouse is to store the goods. There is a time gap between production and consumption. Goods which are in surplus are stored, preserved and made available for meeting the demand when their supply is relatively less. Surplus of goods, if not stored properly, may be lost in value and quality.
(ii) Stabilisation of Prices:
Warehousing facilitates smooth supply of goods in the market and removes violent fluctuations.
(iii) Protection:
Warehousing safeguards the stocks of merchants and saves them from the urgency of making sales for want of room for storing goods.
(iv) Financing:
Warehouse-keeper advances money to the owner on the security of goods stored in his warehouse.
(v) Equalisation of Demand and Supply:
Warehousing makes it possible to withdraw from the market the stock not immediately needed and supply it back when it is required, which helps in equalising the supply and demand. Consumers can get a regular supply of goods even during the off-season periods.
(vi) Processing, Packing, Blending, etc.:
Warehouses provide the facilities of processing, packing, blending, etc. of the goods for the purpose of sale.
(vii) Facilitates Payment of Custom Duties:
A bonded warehouse removes the urgency of paying custom duties. The importer can postpone the payment of custom duty until he withdraws goods from the bonded warehouse.
Essay # 4. Advantages/Importance of Warehouse:
The necessity of the warehouses is based on the following reasons:
(i) Seasonal Production:
Goods which are produced seasonally (like wheat, rice, etc.) must be stored so that they are supplied to the consumers throughout the year. In order to supply such commodities to the consumers, their storage is very much necessary.
(ii) Seasonal Demand:
Many goods (like woollen cloth, umbrella, rain coats, fans, etc.) are produced throughout the year but their demands are seasonal. Such goods must be stored and preserved until the beginning of the next season. To enable the producers producing such goods to work throughout the year, goods produced by them in off-season must be stored in warehouse.
(iii) Storage of Perishable Goods:
Perishable goods like vegetables, fruits, eggs, etc. are stored in cold storage to enable the consumers to consume them regularly throughout the year. In the absence of warehouses, the market for the sale of perishable goods is limited.
(iv) Production at One Place but Demand at Various Places:
When goods are produced at a distance from the consumers they must be stored safely in the warehouses near the market as a protection against delays in supply. It enables goods to be made available to the consumers whenever and wherever they are required by them.
(v) Stabilisation of Prices:
It is necessary to store the goods in the warehouses to avoid the violent fluctuations, especially those goods which are produced during a particular season.
(vi) Curing or Processing:
Some goods require curing or processing before they are ready for sale. So goods should be stored for curing or processing.
(vii) Storage of Raw Materials:
It is necessary to store raw materials to ensure continuous large-scale production.
(viii) Production in Anticipation of Demand:
Most of the goods are not produced to meet ready orders but in anticipation of demand. Therefore, such goods have to be stored until they are demanded.
Essay # 5. Kinds of Warehouses:
Following are the main kinds of warehouses:
(i) Private Warehouses:
These warehouses are owned by the traders or manufacturers to store goods manufactured or bought by them until they are sold out. Since these warehouses are operated for own purposes, their services are not available to other manufacturers. Wholesalers also find it more convenient to deliver goods directly from their own warehouses.
(ii) Public Warehouses:
A public warehouse is one which operates to store goods of any member of the public in consideration of charges. Public warehouses are held to be public utilities. They are organised to provide storage service and facilities to the retailers, wholesalers, stockiest or even general public in return for a storage fee or charge.
In order to provide proper storing facilities to the farmers, General Warehousing Corporation and State Warehousing Corporation have been set up under the Second Five-Year Plan.
The purpose of public warehouses may be enumerated as under:
(i) They provide full safety to the goods and take all possible precautions.
(ii) They provide transport facility for receiving and shipping the goods both on rail and ship.
(iii) They provide useful services to the businessmen.
(iv) They also provide services for the sale of products such as packing, branding, etc.
(v) Purchasers can be taken to the warehouse to inspect the goods.
(vi) Manufacturers or traders can easily borrow on the security of warehouse receipts.
(iii) Cold Storages:
These warehouses are established and organised for providing storage service and facilities to the perishable goods such as, vegetables, fruits, eggs, fishes, etc. They charge storage fee from the traders. In India more and more cold storages are coming into existence.
(iv) Bank Warehouses or Godowns:
Goods pledged to banks against loans advanced by them are kept in such godowns. They are controlled by banks.
(v) Railway Warehouses:
Railway authorities establish railway warehouses. Goods received by railways are kept in such warehouses till they are loaded in the wagons. Similarly, goods unloaded at the destination are kept in such warehouses till the owners claim it by submitting the railway receipt (R/R).
(vi) Warehouses of Food Corporation of India:
There is a chain of warehouses established under the direct or indirect control of Food Corporation of India, where the food-grains thus procured are stored.
(vii) Bonded Warehouses:
Bonded warehouses are those warehouses which are licensed by the Government to accept imported goods for storage before the payment of custom duties by importers of such goods. These warehouses are situated near the ports.
The goods are delivered by the warehouse-keepers only after the payment of import duty has been made. Such warehouses are called ‘Bonded Warehouses’ and goods stored therein are said to be ‘in a bond’. By storing their goods in such warehouses importers gain some control over their goods even before they have paid duty on them. Goods which are meant for re-export are also kept in such warehouses.
These warehouses may be owned by the dock authorities or may be privately owned. They have to work under the control and supervision of the custom authorities. A strict watch is kept on these warehouses by custom authorities.
Essay # 6. Benefits/Services of Bonded Warehouses:
1. The importers are given the facility to keep their goods in such warehouses till they are able to arrange for the payment of import duty.
2. The goods stored in such warehouses may be taken in parts by paying the proportionate duty.
3. The warehouse authorities allow the owners to take their customers in the warehouse for the inspection of goods.
4. The owners of imported goods are allowed to get their goods branded, blended, labelled, etc.
5. Goods stored in such warehouses are quite safe and there is no fear of their being damaged.
6. For the goods imported for re-export, the importer need not first pay the custom duty and later claim it back after exporting the goods This saves him from a lot of botheration and considerable expenses.