Warehousing and storage are one of the most used terms in logistics services. To clear your queries on this subject, we have written this thorough guide covering all your questions, such as what is warehousing and storage, their difference, and types? So, let’s get started!
What is storage?
The word “store” means “collect or gather,” and “storage” represents “gathering or piling something for potential future usage.” In other words, gathering things at a safe place that you don’t need immediately is called storage.
The word storage comprises two smaller words, “store” and “age”.
The modern word store is derived from Middle English words like “stoure”, store” or from Anglo-Normann words like” stor”, “estorr”, “estoer” and from Old French words such as “estor” and Latin word, “instauro”. The word “age” is derived from Middle English and Old French “age” and also from Latin “aticum”.
What is warehousing?
The word “ware” in warehousing means finished products, and “housing” means a safe place to store them. So, warehousing means keeping raw materials purchased from the suppliers or finished products produced by the manufacturers.
Two words, ware, and house join to form the noun Warehouse. It has roots in 14th Century Britain, and it either originated from the Durch word “Warenhuis” or the German word “Warenhause”. This word, warehouse, gained most of its popularity in the 1970s in America.
Difference between warehouse and warehousing:
A warehouse is a physical location, or a facility used to store goods before they are used in the industry or products before they are dispatched to the customers via the supply chain. On the other hand, warehousing includes the whole process of performing this storage at the storage facility. A warehouse is a noun here, and warehousing is the Verb or action.
Types of warehouses:
The different types of warehouses have other uses, which can be very complicated for anyone new to this. Therefore, to assist you in finding the right choice of a warehouse for your needs, we have compiled this list of different types of warehouses.
Here are the different types of warehouses we will be discussing:
- Public warehouse
- Private warehouse
- Bonded warehouse
- Distribution & Fulfillment warehouse
- Cold Storage warehouse
- Hazmat warehousing
- Retail warehousing
A public warehouse provides its service to the general public without any restriction. It is a complete business where an established business owner invests in space, gets all the documents ready, and rents their space to smaller corporations. Small business owners who are just starting their business find public warehouses enough for their needs and within their limited budget; otherwise, private warehouses can be costly.
2- Private warehouse
Privacy comes at a great cost, and for large firms with well-established businesses, money is not the problem, and they can easily afford private warehouses. This extra price includes the rent, security, other facilities, and taxes and staff needed to maintain the warehouse.
3- Bonded warehouse
Bonded warehouses are owned and managed by the government, and these warehouses are more common near the ports. These warehouses are used to store the goods till their owner comes and clears the taxes. Since the government is involved in this storage facility, it is relatively more secure than other warehouses.
4- Distribution & Fulfillment warehouse
These types of warehouses serve as a bridge between manufacturers and retailers. Manufacturers deliver the finished goods, which are then stored in these warehouses until the retailer picks them up for further delivery down the chain. A third party generally manages these warehouses with nothing to do with manufacturing or delivering the goods to customers, and they store goods.
5- Cold warehouse
Some products are susceptible to a temperature, such as dairy products, medicine, etc. To store these products, standard warehouses are not sufficient. Cold warehouses are designed to keep the temperature fixed at a lower point.
These warehouses look pretty similar on the outside to typical warehouses, but they are more controlled and feature a more complex electronic system from the inside. This system helps to keep microorganisms out and keep humidity and temperature within limits.
6- Hazmat warehouse
As the name suggests, Hazmat warehouses deal with hazardous substances that are very dangerous and need to be handled with great care.
To establish a hazmat warehouse, the process is more complex, and you need lots of certificates and permissions to make sure the warehouse fulfills all the safety requirements. These warehouses are typically built outside the cities, away from the population, as a tiny mistake can be deadly.
7- Retail warehouse
Retail warehouses are large single-story storing facilities that store products and fulfill orders to customers and other retailers. Their size is around 1000 square meters, and the main difference between a retail warehouse and any other type of warehouse is that retail houses also showcase their stored products.
Things to keep in mind before choosing a warehouse:
Location of the warehouse:
The location of your warehouse can prove to be the difference between timely delivery and late delivery. If your products are sold in bulk and don’t need them immediately, setting up a warehouse around the rural areas is recommended. Still, if your customers reside in the city and your main objective is to provide them with delivery as soon as possible, you must set up your storage facility inside the city. And in case they are all scattered, then try and find a center and work from there.
Storage keeping unit:
You need to keep the number of Storage keeping units or SKUs in check to manage your storage capacity well. If you have products with different color and size variations, you will need a separate SKU for each of them, thus taking more of the storage space.
Therefore, you must carefully evaluate this data before choosing your storage facility.
Seasonality of your business
If your business is such that it fluctuates significantly between the Low and High seasons, then you need to be more careful while selecting the type of warehouse. Otherwise, you may face a shortage of space during the ON seasons and excess space during the OFF season. Choose a logistics service that covers your needs the best. You need to evaluate your requirements beforehand and then choose the best option.
Equipping your business with modern tech:
Tech is the future, and if your business is not utilizing modern inventions, the world will move forward without you!
Whether your company manages the warehouse itself or uses a third-party warehouse, you must check beforehand whether the facility fulfills modern tech requirements such as automated inventory checking software and delivery software and the latest security.
Further, if you are storing temperature-sensitive products, you must check this facility before closing the deal. Here, your one wrong move can cost you your money and land you in jail.
Benefits of warehousing:
Warehouses serve as a great way to keep an account of all your raw materials coming into the manufacturing process and finished products getting out of the manufacturing. This gives you much-needed peace of mind. You get a sound check and balance on your delivery system. Warehouses are necessary for any business’s fast and more efficient delivery system. A company with a well-automated storage and delivery system is more likely to succeed than one with a poorly managed warehousing storage service.
Storing your products within the company premises is dangerous and not an ideal thing to do. Making small segments of a giant corporation is the best way to motivate and manage your staff. Therefore, most big corporations either have their external warehouses or use third-party storage services for management.
Difference between storage and warehousing:
Warehousing is a type of storage, and therefore both storage and warehousing are used interchangeably. However, they are not entirely the same. They have slight differences, which helps us classify them into separate terms.
- Storage means gathering something, whereas warehousing means planned gathering for later usage.
- Storage is a general term, whereas warehousing is a specific business term that refers to the process of storing goods at a warehouse,
- The term storage is ancient, and finds its origin is traced back to the 13th century, whereas warehousing is a newer term, and its origin can be traced up to the 17th century.
- A storage facility can be used for domestic usage, whereas a warehouse facility is typically used for commercial or industrial usage.
- Storage other than warehousing is more expensive.
Both warehousing and storage serve the purpose of storage. This storage size requirement varies from very short in the case of small businesses to substantial space requirements for large companies. Further, it depends on the product you are storing and its quantity.
For a small business, a home or a small shop is enough to keep their products, but this storage space is not enough to handle the mass orders of big enterprises. And a good investment in a well-established warehousing storage service can be the difference between a successful and failed business.
By now, you must be clear on what is warehousing and storage. In case you still need to revise the concept, here we go: both storage and warehousing serve the purpose of gathering something. Storage is a more general term, whereas warehousing is a more specific term; warehousing is a type of storage.