STORAGE / WAREHOUSING / DISTRIBUTION CENTERS
Storage function is a part of a business activity and the result of buying or manufacturing. It refers to holding goods till they are demanded, sold, ripened, or consumed. It has following reasons:
1. Goods are in the form of raw materials or work-in-process.
2. They are not yet demanded.
3. They are held in off-seasons.
4. When goods cannot be sold at a price desired.
Storage causes increase in prices, creates time utility, and facilitates seasonal use. Some goods are produced throughout the year but used seasonally. For instance, fans, air-conditioners, umbrellas, warm cloth, blankets, etc. are produced regularly but consumed seasonally. Conversely, some goods are produced seasonally but used round the year. They are agricultural produces, especially grains. Wheat rice, lentils are grown seasonally but used round the year. In the absence of storage these two problems could not be averted. Hence, it plays a vital role not only in business but in our daily lives. Even shop-keeping is a form of storing.
Warehousing or storage has been discussed above briefly. It has already been explained that storage is the holding of goods till they are used or sold. Warehousing is the synonymous term to the storage.
The objectives of warehousing are as under
1. Seasonal production and continuous use
2. Continuous production but intermittent use
3. Waiting for the better prices
4. Short demand compelling warehousing
5. Uncertain demand or supply
6. Excessive supply