A warehouse is a building for storing goods. Warehouses are used by
manufacturers, importers, exporters, wholesalers, transport businesses,
customs, etc. They are usually large plain buildings in industrial parks on the
outskirts of cities, towns or villages.
They usually have loading docks to load and unload goods from trucks.
Sometimes warehouses are designed for the loading and unloading of goods
directly from railways, airports, or seaports. They often have cranes and
forklifts for moving goods, which are usually placed on ISO standard pallets
loaded into pallet racks. Stored goods can include any raw materials, packing
materials, spare parts, components, or finished goods associated with
agriculture, manufacturing, and production.
Better Inventory Management
More Efficient Packing and Processing
Superior Customer Service
Ensure Price Stabilization
Improved Risk Management
Warehousing is when you purchase goods from a manufacturer
and store them before they are shipped to another location for
Improved Inventory Accuracy
Reduced Overhead Cost
Better Staffing Levels
Protection of Goods
Superior Flow of Goods:
(a) Warehouses constructed by farmers/producers near their
fields/places of work.
(b) Warehouses owned and managed by wholesalers and retailers close
to their selling centers.
(c) Warehouses constructed by manufacturers near their production
(d) Warehouses taken on rent by retail stores.
(e) Retailers may have several regional warehouses to cater the needs
of their stores.
(f) Warehouses owned/leased by a wholesaler where it stores and
a. Customs Bonded Warehouse
Customs Bonded Manufacturing Warehouse
Garment/Textile Manufacturing Bonded Warehouse
Miscellaneous Manufacturing Bonded Warehouse
Common Bonded Manufacturing Warehouse
b. Public/Private Bonded Warehouse
c. Customs Bonded Trading Warehouse
d. Multinational Regional Bonded Warehouse
Raw materials storage
These warehouses store raw materials and components either close to
the point of extraction or close to the manufacturing point. Raw materials
must be held in order to ensure continuous production. These materials
include plastics, precious metals, sand, aggregates, etc.
Intermediate, postponement, customization or sub-
These warehouses are used to store products temporarily at
different stages in production. These centres are also used to
customize products before final delivery to the customer.
specific packaging or labelling being changed or added, eg for
store ready items or printing in different languages;
computer assembly to include different graphics cards,
product bundling for promotional activity;
country-specific items being added such as electrical plugs;
special messages being added, eg stencilling of greetings
messages on mobile phones.
Finished goods storage
These warehouses store products ready for sale, on behalf of manufacturers,
wholesalers and retailers. They provide a buffer or safety stock for companies,
enabling them to build up stock in preparation for new product launches, expected
increases in demand and to deal with seasonality.
Consolidation centres and transit warehouses
Consolidation centres receive products from different
sources and amalgamate them for onward delivery to the
customer or onto a production line. This can include just-in-time
centres where automotive parts are delivered to a warehouse
where they are brought together and sequenced for delivery onto
the production line. They can also be retail stock consolidation
warehouses where products from different suppliers are
consolidated for onward delivery to the stores.
Transhipment or break-bulk centres
Transhipment centres receive products in large quantities
from suppliers and break them down into manageable quantities
for onward delivery to various locations.
Cross-dock centres are seen as being the future for warehousing. Efficient
consumer response and quick response within retail require operations to be able to
move goods quickly through the supply chain. Cross docking requires deliveries into
these centres to be already labelled and ready for onward delivery.
Sortation centres are used in the main by letter, parcel and pallet distribution
companies. Goods are collected from all parts of the country, delivered into hubs or
sortation centres, sorted by zip or post code, consolidated and delivered overnight to
their respective distribution areas for onward delivery.
The growth of e-retailing has seen an increase in the number of customer
fulfilment centres. These warehouses have been designed and equipped specifically
The Role of the Warehouse 11 to manage large volumes of small orders. The video
shows the fulfilment operation of an internet retailer called i-herb.com
www.youtube.com/watch?v=uAsl8-UQJFI (Dematic Corp)
Reverse logistics centres
a number of warehouses have been set up specifically to deal with returned items.
Third-party contractors are providing a service to retailers where customers return
unwanted or defective items to the stores; the items are then consolidated and sent to
the returns centre, where they are checked and either repackaged, repaired, recycled or
Other reverse logistics processes include the return of reusable transit packaging
equipment such as roll cages, barrels, kegs, pallets, tote boxes and trays. When used in
the food industry added services include washing and sanitizing the items before they
re-enter the supply chain.
Public sector warehousing
Outside the commercial world there are also warehouse operations
which support the public sector, armed forces and the third sector.
Other public sector warehouses will store supplies for local
government facilities such as schools and offices. Products will include
stationery, uniforms, furniture, computer hardware and software, etc.
a. Uncertain and erratic demand patterns
b. Trade-off between transport and shipping costs, justifying larger
c. Discounts via bulk buying
d. Distance between manufacturer and the end consumer
e. Cover for production shutdowns
f. Ability to increase production runs
g. To manage seasonal production
h. High seasonality
i. Spare parts storage
j. Work-in-progress storage
k. Investment stocks
l. Document storage
Wide, narrow and very narrow aisle racking
Used in faster-moving operations, particularly in order picking by case and
by unit. These suit secondary distribution layouts, where access to a wide range of
stockkeeping units (SKUs) is required, and delivery lead times are short. Often reserve
stock is held in a national or primary distribution centre (NDC or PDC).
Wide Narrow Very narrow aisle racking
Drive-in racking. Used for bulk pallet storage and more frequently for longer-term
storage, to suit seasonal production and supply peaks or production/packaging
operations to meet different packing formats.
Mobile racking. Buildings must first be constructed with mobility in mind, as the
building needs substantial steel runners set flush into the insulated cold-store floor
surface. Popular with smaller companies that have higher volumes to store but also
need accessibility for range and stock rotation.
Automated storage. More common in continental Europe, although recent developments on
behalf of multinational food processors in the United Kingdom have seen two further high bay
stores built and commissioned for primary/national pallet storage and distribution. These are very
economical for customers if volume related, and best attached or contracted to a high-volume
production plant. However, they are totally dependent on design and WMS software for
operational capability and capacity/speed, and these demand high standards of presentation within
the design pallet gauge. Reliability is key, with benefits in low manpower and energy costs.
Energy management and plant maintenance- Energy is a large proportion of
operating costs, ranging from 12 to 30 per cent on average. The actual amount will
depend first on the age and condition of the building, relative thermographic integrity
and the age and management of refrigeration plant, and second on equipment
management and maintenance.
The focus on energy and carbon reduction has resulted in significant
research in techniques by which to generate even greater improvement. These
● a reduction in cooling demand by ensuring that product enters at the
● improved plant design;
● improved operational management and maintenance;
● recovery of heat to use elsewhere in the business – hot water, space
● examination of the use of CHP (combined heat and power) – tri-
● consideration of low carbon electricity – wind, wave or hydro-electric.
In addition, there are more radical approaches; with more positive and closer
store management attention. These are as follows:
● carefully review the cold-store room layout and thereby change the temperature
● raise refrigeration evaporating temperature for a potential 11 per cent or more cost
● reduce refrigeration condensing temperature;
● seasonally adjust refrigeration to take account of external ambient temperature;
● where fitted, split cold-store and blast-freezer refrigeration systems;
● install and use variable-speed drive fans; and
● focus on and manage more closely door opening design and operations.
Safety and risk assessment:
There are two different types of refrigerants used in temperature-controlled
stores. These are either Hydro Chloro Carbon (HFC/HCFC) or ammonia based, with
sometimes a brine or Freon secondary refrigerant, to minimize the ammonia charge.
HFC based refrigerants are currently being phased out, as a consequence of
legislation following the adoption of the Montreal Protocol, to reduce Ozone
Depleting Substances (ODS) or those with high Global Warming Potential (GWP).
Health and safety issues
● accidental lock-in risk, requiring alarms and quick-release equipment;
● the effect of cold on people and use of PPE require specific advice
and training for staff to wear appropriate thermal clothing, drink lots
of water, protect bare skin (particularly fingers, noses and ears),
taking greater care if smokers or drinkers;
● accidental release of refrigerant, particularly ammonia;
● use of materials-handling equipment in slippery floor areas where
ice build-up may occur, particularly around door openings. Slip and
trip hazards are ever present along with the risk of skidding
● ice build-up on panels present an ice-fall hazard, and can, if left, cause roof
panels to fall, risking injury to operators below;
● product falls from pallet racks, due to displaced product;
● working at heights: the use of non-integrated platforms using forklift trucks has
effectively been eliminated from all stores other than in sub-zero temperatures, and
the use of mechanized elevating working platforms (MEWPs) is obligatory.
However, these items of equipment are not equipped for sub-zero temperatures.
Here the practice is closely scrutinized as agreed between the industry and the
Health and Safety Executive.
● The Food Storage and Distribution Federation, British Frozen Foods Federation
and Health and Safety Executive have worked together to deliver a Supplementary
Guidance (PM 28) during 2010 to help manage these risks.