Once upon a time, there would have been little point discussing warehouse types. Warehouses of yesteryear mostly served only as holding points for inventory, large quantities of which were accumulated by manufacturers and producers with no knowledge of concepts like make-to-order, postponement or other inventory reduction strategies.
Don’t worry too much if you too, have little idea about these concepts. Stick with us and you will soon possess a wealth of practical logistics knowledge, including that of warehouse, logistics and supply chain strategy.
To return to the humble warehouse though, this short post will help you understand the different warehouse types in use today and some of the ways in which they are used to add value to products and services.
The 4 Primary Warehouse Types
Modern warehouses can be centres for many forms of logistics activity, but still the facilities can themselves be largely grouped into four main warehouse types.
Production Warehouses: The main goal of a production warehouse is to even out the demand for raw materials, and perhaps also for semi-finished or finished goods. Typically located within a manufacturing or production site, this warehouse type may hold stocks of raw materials and/or components used in the manufacture of goods, primarily to ensure that the manufacturing/production process is not disrupted by material shortages.
Storage Warehouses: This warehouse type is often used for long-term storage of finished goods as part of a company’s outbound supply chain operation. At one time, storage warehouses were extremely common, as many companies employed a make-to-stock or “push” strategy in their supply chains. Today, they are still used for this purpose, although perhaps to a lesser degree.
Storage warehouses are also used by companies specialising in maintenance, repair, and similar activities where parts and equipment need to be stored ready for use when required.
Fulfillment Warehouse: Often known as distribution centres (DCs), fulfillment warehouses differ considerably from other warehouse types, if not in physical structure, certainly in the types of activity taking place within their confines. Key features of a typical DC are as follows:
- It acts as a centre for value added services, such as order fulfillment, labeling, packaging, cross-docking, and transportation.
- It’s focused as much (if not more) on customer service excellence as on efficient storage.
- It will utilise a lot of technology to improve service, cost, and efficiency.
- It serves as the primary supply chain link between suppliers and customers.
Sorting and Consolidation Warehouses: This warehouse type is not principally used for storage, but rather for receiving large inbound shipments and then breaking them down into smaller outbound loads. They might also be used for consolidating small inbound shipments into larger ones for dispatch to customers such as retail chains.
Learn More about Warehouse Types and Uses
If you are already a student at the Supply Chain Leaders Academy, check out eClass numbers 10, 11,14,16,17,58,59,60, or 84, to learn more about warehouses and the operations taking place within them.
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