Different Types of Warehouses and Their Advantages

Running a business related to selling and manufacturing goods and considering taking care of your own logistics yourself? Then you must be on the lookout for a warehouse.

A warehouse is defined as a place used for storage or accumulation of goods or the assumption of the responsibility for the storage of goods. They are operated differently and there are also different types of warehouses. Learning about these classifications will help you in picking the right one to purchase or rent for your business.

What Are The Different Types of Warehouses?

Here are each type of warehouses and their advantages explained:

Private Warehouses

Private Warehouses
A private warehouse is a warehouse that is privately owned by wholesalers, distributors, or manufacturers.

Private warehouses are the ones owned and operated by the big manufacturers to manage their own storage needs. One of these warehouses may very well be a part of a large network of these manufacturers.

Examples of Private Warehouse: 

  • Farmers/producers can construct private warehouses near their farms/fields/places of work.
  • Wholesalers and retailers own and manage this kind of warehouses close to their selling centers for quick access to their inventory.
  • Warehouses constructed by manufacturers near their production plants to store raw materials required for production.
  • Warehouses are taken on rent by retail stores.
  • Retailers may have several regional warehouses to cater to the needs of their stores.
  • Wholesaler owned/leased warehouses from where it stores and distributes goods.

Advantages of Private Warehouses:

Its biggest advantage is the unlimited control it grants clients. To determine how you can best utilize the space of the warehouse on your own, keep track of the inventory’s internal flow. End-users will also benefit well depending on how the human resources usage of the warehouse department.

Public Warehouses

Public Warehouses
A public warehouse is a business that provides short or long-term storage to companies on a month-to-month basis.

Public warehouses are commercial spaces for lease for businesses that provide storage facilities to the general public for a certain charge. These establishments are owned by either the government or a semi-government body like a cooperative. Warehouses of this type are usually built to aid small traders who do not have the means to purchase or lease their own.

Examples of Public Warehouse: 

  • Warehouses are owned by the government and semi-government organizations for private companies to store goods on payment of rent.
  • Warehouses owned by private logistics companies that offer services that can allow other third-party businesses to outsource part of all of their supply chain management function.

Advantages of Public Warehouses:

These facilities are excellent for easy loading and unloading of goods. Plus, the receipts that traders get from them can serve as collateral security in instances that they would need to borrow money. Also with the use of a public warehouse, any businessman will be able to serve their customers quicker by carrying regional stocks near the important trading centers or markets of two countries.

Bonded Warehouse

Bonded Warehouse
Unlike a non-bonded warehouse, a Customs bonded warehouse is a secure location at which you can store, export, and import goods.

Bonded warehouses are used for the storage of imported goods awaiting their due payment. These ones are usually located near ports and are either operated by the government or work under the control of customs authorities.

Examples of Bonded Warehouse: 

  • Warehouses that are located at or very close to ports to store goods at the port of entry and distribute them as and when required.
  • Warehouses built by the government for payment of customs duties and taxes on goods stored or processed there.

Advantages of Bonded Warehouse:

As aforementioned, these establishments provide a great deal of help for importers or exporters. Importers can keep their goods inside a bonded warehouse if he or she does not have the means to pay them yet.

Distribution Warehouse

Distribution Warehouse
A distribution center/warehouse is a specialized building that’s designed to store products for retailers and wholesalers, to be redistributed.

Distribution warehouses are designed for administering goods that are nearing the end of the supply chain. When products are already manufactured and ready to be distributed to retailers, a distribution warehouse is a specific type of warehouse where they are stored for a short period of time; in most cases a day or two.

Examples of Distribution Warehouse:

  • Warehouses that handle perishable products in the morning and distribute them by the end of the same day.
  • A warehouse that works as a”Retail distribution center” to distribute goods to retail stores.

Advantages of Distribution Warehouse:

Since the goods are stored for a very short period of time by keeping easy inbound and outbound movement in mind,  it is easy to track, inventory, and locate products within the warehouse. T risk of damage, loss, and theft of your products are also lower because these types of warehouses are designed to meet the needs of specific kinds of products.

Climate Controlled Warehouse

Climate Controlled Warehouse
The purpose of climate-controlled warehouse is keeping your property away from extreme fluctuations in temperature, both hot and cold.

Most warehouses are designed with large open spaces so that the goods can be moved in and out constantly, which sometimes can cause temperature fluctuations. For example, there can be cool spots near loading bays and hot spots on shelves where the airflow is blocked. A climate-controlled warehouse is a specialized facility where both temperature and humidity are maintained at a constant to minimize the effect of environmental fluctuations on products stored there.

Examples of Climate Controlled Warehouse:

  • Warehouses built for temperature-sensitive products with temperature control for winter/summer.
  • Warehouses build for storing vaccines or pharmaceuticals where climate control is ensured for the safety and efficacy of products.
  • Warehouses built for products that require refrigerated products (i.e. Dairy Products) fulfillment services.

Advantages of Climate Controlled Warehouse:

By maintaining the right humidity levels in a storage area, climate-controlled warehouses can deter mold and mildew, which are especially damaging to wood, fabric, and a wide range of other fragile products including artworks and antiques.

Automated Warehouse

Automated Warehouse
Warehouse automation range from robots for handling goods to specialized software for tighter inventory management.

An automated warehouse is a highly efficient, fast, and agile facility that uses modern equipment and technology like AI and robotics, order tracking software, forklifts, racking, and pallets to move goods quickly in and out of the warehouse. Currently, there is more than 10% of U.S. warehouses are already using automated warehousing equipment.

Examples of Automated Warehouse:

  • Warehouses that deploy various forms of mechanized automation i.e. goods-to-person (GTP) technology to cut down on manual processes.
  • Warehouses that have automated data collection that leads to better inventory preparation and planning.

Advantages of Automated Warehouse:

An automated warehouse minimizes the number of manual tasks that slow down the movement of goods, and you’ll have less incidence of human error and the ability to make the goods inbound and outbound process more efficient.

Co-operative Warehouses

Co-operative Warehouses
As the very name suggests, Co-operative Warehouses are owned, managed, and controlled by the members of co-operative societies.

Co-operative warehouses are storage facilities that are built to offer the most economical rates to the members of a co-operative society that owns, manages, and controls it. The basic goal behind setting up this kind of warehouse is to help Its members rather than earning a profit.

Examples of Co-operative Warehouse:

  • Warehouse built by co-operative societies to minimize the risk of loss or damage to goods in storage borne by the warehouse keeper.
  • Warehouses that are built with a non-profit vision for the members.

Advantages of Co-operative Warehouses:

Co-operative warehousing leads to the elimination of middlemen, and since the control and management of the warehouse is in the hands of Its members, that ensures a better quality of goods to the members.

Final Words

Remember to consider and assess your business’ needs and capabilities before and during your warehouse search. The right choice will highly depend on those factors.

To sum up, this variety of warehouses have their benefits for different people engaging in their own business endeavors and there is definitely something for you where you can potentially grow your own business.

Note: This article was updated on 11.07.2020 to reflect more relevant information on the topic as part of our constant effort to provide you with the best information available on the web. Please feel free to point out any mistakes or additional aspects that we can cover in this article in the comment section below.  

One thought on “Different Types of Warehouses and Their Advantages

  1. I think I’ll get this translated into the local language here in Cambodia, it might help explain to the agents exactly what I need. Thanks good read.

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