Six Types of Warehouses You Should Know About to Strategize Demand Better
Oct 7, 2021
6 mins read
Customers are a moving target, and there is no single trick in the book to pin them down. The only way to ensure that a business continues flourishing is by keeping up with their ever-growing expectations. Intelligent warehousing is an underappreciated part of it.
Despite the COVID-19 pandemic, there has been a steady increase in the number of people employed in the public storage and warehousing market. In 2021 alone, more than 254,000 people were hired in the U.S. to fulfill the basic backup services for the transportation and logistics industry. The numbers are only expected to grow with increasing demand.
As with businesses, warehousing has also evolved. Product customization is no longer a part of just manufacturing but a primary focus of modern warehousing as well. Warehouses are seen as the last stage of opportunity for businesses to get ahead of the competition. But, before we understand how warehouses can help strategize demand better, let us look at the different types of warehouses.
Different Types of Warehouses
Warehouses are mainly divided into public and private. The former is owned by government or government-affiliated bodies and made available for storage to companies for a certain period of time. Businesses can own public warehouses on a short and long-term contract basis.
They serve as an excellent option for small businesses and e-commerce startups that are running on a limited budget. Like any other warehouse, they can be used for inventory management and shipping, but what sets them apart is that businesses don’t have to bear the costs of running the operation. Purchase of any storage machinery or software and its maintenance all fall upon the warehouse owner.
Private warehouses are different from public warehouses in that the owner has complete control over the warehouse operations. Large retail corporations, manufacturers, wholesalers, and distributors own and operate them. Also known as proprietary warehouses, they require capital investment at the beginning but bring profits to the company in the long run.
Many small-scale businesses looking to create a long-term strategic presence in a particular region can invest in private warehouses. Their appeal lies in the consumer access they provide. Companies have complete control over them and oversee all the processes closely.
The term distribution center is often used interchangeably with warehouses, but the two are quite different from each other. For one, distribution centers are larger in size, which helps in the movement of large quantities of goods over a short period. Their operations are more complex too.
Simply put, a distribution center is a hub where goods are stored and shipped. Inventory storage and shipping management constitute a big part of these centers. As most businesses now offer reverse pickup, logistics of the same are also worked out at distribution centers.
All distribution centers are roughly divided into three sections – the loading dock, the storage area, and the shipping section. Processes such as order fulfillment and cross-docking are taken care of as well in some cases. Some of the qualities of distribution centers are listed below:
- Dynamic storage: Unlike warehouses, the movement of goods in distribution centers is quick. They’re agile and not mere places to store inventory. In fact, goods staying in one place in a distribution center for a long time is an indication that something is off in the supply chain.
- Customer first: While warehouses aim at keeping goods stored properly, distribution centers focus on fulfilling customer expectations. The flow of goods within the distribution center relies completely on the changing customer demands, order volumes and the business’ territory plan.
- More elaborate processes: Unlike warehouses, distribution centers take care of picking and packing of the order as well as cross-docking. Some ensure product assembly as well.
- Better technology: The processes mentioned above are carried out with the help of advanced technology. Artificial Intelligence (AI) and machine learning (ML) help serve distribution centers better. All forward-looking businesses rely heavily on technology for their supply chain processes. This includes complex inventory management softwares and AI-enabled robots to move stock within the center.
As the name suggests, climate-controlled warehouses are used to store perishable goods that need to be kept under a particular temperature. From humidity-controlled environments to freezers, climate-controlled warehouses are vital in keeping temperature fluctuations in check to ensure the freshness of goods.
These are essentially used for storing imported goods before custom duties are levied on them. As a result, the companies do not need to pay any customs charges until the product is released, so importers don’t have to pay duties till they find customers. Bonded warehouses are an efficient way for governments to ensure that importers pay taxes, making them ideal for cross-border trade.
Any warehouses that make use of AI for their storage and fulfillment processes are known as smart warehouses. From packaging to transportation, all functions in a smart warehouse are fully automated and require minimal human labor.
Centralized and Flexible Operations for More Efficient Warehouses
Apart from creating a value-based approach that places the customer on top, consolidating multiple warehouses into a single and efficient facility can lead to savings. This means reduced transportation costs and room to create a c warehouse system that minimizes the error in data collection.
By creating a flexible warehouse design, businesses can make the best use of the available space involving all departments concerned. Productivity can be ensured by warehouses that are designed keeping in mind the different kinds of workers and their needs.
As e-commerce and supply chain trends are changing, warehouses are evolving too. The warehouse growth spurt is indicative of not just a physical change but an operational one as well. Opting for the right warehouse management system (WMS) software can solve several challenges that warehousing faces.
Locus offers best-in-class logistics technology solutions to supply chain enterprises to improve last-mile deliveries. Get in touch with us for a quick tour of our solutions.
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Six Types of Warehouses You Should Know About to Strategize Demand Better
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