A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.
Some warehouses are completely automated, with no workers working inside. The pallets and product are moved with a system of automated conveyors and automated storage and retrieval machines coordinated by programmable logic controllers and computers running logistics automation software. These systems are often installed in refrigerated warehouses where temperatures are kept very cold to keep the product from spoiling, and also where land is expensive, as automated storage systems can use vertical space efficiently. These high-bay storage areas are often more than 10 meters high, with some over 20 meters high.
The direction and tracking of materials in the warehouse is coordinated by the WMS, or Warehouse Management System, a database driven computer program. The WMS is used by logistics personnel to improve the efficiency of the warehouse by directing putaways and to maintain accurate inventory by recording warehouse transactions.
For a warehouse to function efficiently, the facility must be properly slotted. Effective slotting addresses which storage medium a product will be picked from (pallet rack or carton flow), and how they will be picked (pick-to-light, pick-to-voice or pick-to-paper). With a proper slotting plan, a warehouse can improve its inventory rotation requirements-- such as FIFO (First In First Out) and LIFO (Last In First Out)-- control labor costs and increase productivity. (1)
Traditional warehousing has been declining since the last decades of the 20th century with the gradual introduction of Just In Time (JIT) techniques designed to improve the return on investment of a business by reducing in-process inventory. The JIT system promotes the delivery of product directly from the factory to the retail merchant, or from parts manufacturers directly to a large scale factory such as an automobile assembly plant, without the use of warehouses. However, with the gradual implementation of offshore outsourcing and offshoring in about the same time period, the distance between the manufacturer and the retailer (or the parts manufacturer and the industrial plant) grew considerably in many domains, necessitating at least one warehouse per country or per region in any typical supply chain for a given range of products.
Recent developments in marketing have also led to the development of warehouse-style retail stores with extremely high ceilings where decorative shelving is replaced by tall heavy duty industrial racks, with the items ready for sale being placed in the bottom parts of the racks and the crated or palletized and wrapped inventory items being usually placed in the top parts. In this way the same building is used both as a retail store and a warehouse.
Modern warehouses are also used at large by exporters/manufacturers as a point of developing retail outlets in a particular region or country. This concept reduces the end cost of the product to the consumer and thus enhance the production sale ratio. Warehousing is an age old concept which can be used as sharp tool by original manufacturers to reach out directly to consumers leaving aside or bypassing importers or any other middle agencies or person.
The internet has had an influence on warehouses too. Internet based stores do not require physical points of selling. However, warehouses are still required to store the goods. Since direct contact with customers means many small orders, this is a different situation where stores would be ordering large numbers of goods. Simply said, warehouses change from shipping large quantities of goods to shipping large numbers of small quantities of goods.
Having a large and complex supply chain containing many warehouse may be costly. Sometimes, it is beneficial to have one large warehouse per continent. This warehouse should be located at a central point, where transport is available to all other destinations. At these continental hubs, goods have to be customized for different countries. For example, goods get a price ticket in the language of the country where it will go. Making small adjustments to goods at a warehouse is called value added services.
Some of the most common types of warehouse storage systems are: