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NIOS Class 10 Warehouse Principles & Inventory Management Chapter 3 Types of Warehouse
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Types of Warehouse
Chapter: 3
Intext Questions 3.1
(i) _____________ is a commodity or cargo that is stored and transported unpacked in large quantities.
Ans: Bulk cargo.
(ii) Which of the following types of warehouses is characterised by a large number of Stock Keeping Units and carry various types of bins to store material of different sizes?
(a) General merchandise warehouses.
(b) Bonded warehouses.
(c) Spare parts warehouses.
(d) Bulk warehouses.
Ans: (c) Spare parts warehouses.
(iii) _________are typically used to store material which cannot be stored within the enclosed structure of a Warehouse.
Ans: Open yards.
(iv) _______________warehouses are built using traditional method of brick and mortar.
Ans: Reinforced cement concrete.
(v) ____________warehouses provide protection from environment and ensure safety and security of the material stored.
Ans: Walled warehousing.
Intext Questions 3.2
(i) List any five advantages of warehousing.
Ans: (a) Price stabilisation.
(b) Risk bearing.
(c) Financing.
(d) Protection and preservation of goods.
(e) Regular flow of goods.
(ii) __________ a warehousing technique favoured by the agricultural sector.
Ans: Spot stocking.
(iii) Warehouses can play a good supporting role in ensuring that the company runs out of the product (True/ false).
Ans: False.
(iv) Warehouses can only help in maintaining the___________ supply of goods for meeting demand from the consumers
(a) maximum.
(b) minimum.
(c) constant.
Ans: (c) constant.
(v) Warehouse incurs very low administration costs (True/false).
Ans: False.
Intext Questions 3.3
(i) In the warehouses, _____________ should be used to load and unload the goods.
Ans: Mechanical appliances.
(ii) A warehouse which basically is used to store ___________ type of goods should be equipped with proper cold storage, moisture resistance etc.
Ans: Perishable.
(iii) The warehouses should be established at a place where market for raw materials and for selling finished goods is as far as possible (True/false).
Ans: False.
(iv) Name two safety measures in warehouses.
Ans: Fire extinguishers and safety alarms.
(v) The warehouse location, layout, construction and maintenance should be done in such a way that ensures maximum storage of goods at maximum expense (True/ false).
Ans: False.
| Terminal Exercise |
1. Explain about private warehouses.
Ans: Private warehouses comprise those kinds of warehouses which are owned or leased by a company or organisation for its own private use to store its own goods. These types of warehouses are generally used by companies with long term stable warehousing needs. Large retail companies like Big Bazaar or Reliance, E-commerce companies like Flipkart, large FMCG or FMCD companiestend to build private warehouses.
2. What is meant by open yards?
Ans: Open yards are typically used to store material which cannot be stored within the enclosed structure of a Warehouse. Examples could be Cars, Commercial Vehicles, Large Pipes, Steel Structures, Plastic Water Tanks, ISO Containers, Heavy Industrial Equipment, Timber, Steel Coils and Machinery. These kinds of materials are stored open to the sky. The open yard carries boundaries and fencing for security of the material stored inside. Lot of times cranes are required to unload and load the material in open yards.
3. Define bonded warehouses.
Ans: This warehouse is specially licensed by Customs authorities and used by importers for deferment of duties. The importer brings in goods into the country and stores in the bonded warehouse till he actually requires the goods. The importer pays the customs duty at the time of withdrawal from the bonded warehouse and thus delays payment of the customs duty.
4. What is cross docking?
Ans: These warehouses provide cross dock services. Cross-docking is a logistics practice where the goods are unloaded from incoming vehicles at the warehouse and loaded on to the outbound vehicles with limited or no storage at the warehouse. Cross-docking could be required in various scenarios. Where there is a requirement of break bulk, a large shipment from factory or imports broken into smaller lots and moved to distributors and dealers. On the inbound side, material from several suppliers is consolidated, sequenced and supplied to the assembly line.
5. What do you mean by ambient warehouse?
Ans: These are warehouses which operate at normal ambient temperatures. All goods which do not require controlled temperatures are stored in these warehouses. During summers, the temperature inside these warehouses can really go up. To control the temperatures several features are built into warehouse structure like Turbo or Ridge ventilators on the top, Insulation layer on the roof of the warehouse. Exhaust fans etc. Industrial fans with long blades are also being used to keep the temperature down inside the warehouse.
6. Discuss the types of warehouses based on ownership.
Ans: On the basis of ownership, warehouses are divided into 3 types.
They are:
(i) Private Warehouse: Private warehouses allow the owning company a large amount of control and flexibility in running their operations. They can build automation and mechanisation within the warehouse taking a long term view. These private warehouses are firmly wedded to the company’s supply chain strategy and long-term planning.
(ii) Public Warehouses: Public Warehouses are those warehouses which are owned by organisations like the Government, cooperatives, private sector companies or individuals. The space in the public warehouse can be used by any other organisation by paying a fee for usage of space. Central Warehousing Corporation (CWC) is the largest Government sector public warehousing company. It mainly offers space for storage of agricultural produce.
(iii) Co-operative Warehouses: As the very name implies, these warehouses are owned, managed and controlled by cooperative societies. These co-operative societies provide storage facilities at the most economical rates to their members only. The basic purpose to run such warehouses is not to earn profit but to help their members.
7. Explain the classification of warehouses based on special services being provided?
Ans: The classification of warehouses based on special services being provided are:
(i) Bonded warehouse: This warehouse is specially licensed by Customs authorities and used by importers for deferment of duties. These warehouses are generally located close to ports or ICDs (Inland Container Depots). The warehouse is required to give an undertaking or “Bond’ that it will not allow the goods to be removed without the consent of the custom authorities.
(ii) Export and Import warehouses: These warehouses are located close to ports and dry ports to aid the process of exports and imports. A dry port is an inland terminal connected by road or rail to a seaport which acts as an operating centre to transhipment of sea cargo to inland destinations, The export goods can be stored at export warehouses for inspection and containerization before final exports. Similarly imported goods can be stored at the import warehouse for break bulk, redistribution and other value add services.
(iii) Cross Dock Warehouses: These warehouses provide cross dock services. Cross-docking is a logistics practice where the goods are unloaded from incoming vehicles at the warehouse and loaded on to the outbound vehicles with limited or no storage at the warehouse. In a hub and spoke model, the way Gati. Safex and other express companies practise, material is collected from all around the hub, cross docked at the nearest hub warehouse and moved to various destination Hub locations.
8. What are different kinds of warehouses based on temperature?
Ans: The different kinds of warehouse based on temperature are as follows:
(i) Cold Storage or Refrigerated Warehouses or Temperature controlled warehouses: These are the warehouses which are used for storing perishable commodities like medical items, butter, ice creams, fruits, vegetables, fish, fresh meat etc. Goods stored in cold storages can be held for a longer time. In fact, cold storages have made possible the regular supply of certain commodities throughout the year. For example, apples are available throughout the year in the market as they are stored in Refrigerated warehouses and released in batches throughout the year to maintain a constant flow.
(ii) Ambient warehouses: These are warehouses which operate at normal ambient temperatures. All goods which do not require controlled temperatures are stored in these warehouses. During summers, the temperature inside these warehouses can really go up. To control the temperatures several features are built into warehouse structure like Turbo or Ridge ventilators on the top, Insulation layer on the roof of the warehouse. Exhaust fans etc.
9. Write about the various warehouses based on the material used for construction.
Ans: The following various warehouses based on the material used for construction:
(i) Peb Warehouses: Pre-Engineered Building (PEB) is a combination of precast- & -prefabricated-structures. Pre Engineered Building concept involves the steel building systems which are predesigned and prefabricated. The modem warehouses across the world as well as in India are getting built using this technology. This technique offers numerous advantages -Less cost of construction, large height, less number of pillars, temperature control inside the warehouse, large sunlight during day time for operations, faster time of construction, larger sizes and better aesthetics of the warehouse.
(ii) RCC Warehouses: These warehouses are built using traditional methods of brick and mortar. The roof of these warehouses is built of RCC material. These warehouses are characterised by a large number of pillars inside the warehouse to support the RCC roof. The height of these warehouses is limited and typically about 12-18 feet. As they are RCC in nature they can be built multi storey also. The traditional warehouses in India used to be RCC in nature. However, the new warehouses now being built are mostly PEB in nature.
10. What are the disadvantages of warehousing?
Ans: Following are the disadvantages of warehousing:
(i) High Setup Costs: The biggest disadvantage of having a warehouse is that the initial setup cost for setting is huge and companies that are small are not able to afford the initial setup expenses of the warehouse. So small and medium businesses depend on the public warehouse or rented warehouse for storing their goods.
(a) Additional Administrative Costs: Another limitation of warehouses is that apart from initial setup costs, the company also has to pay recurring expenses like salary to warehouse employees, electricity bills and other administrative expenses which in turn reduce the company’s profits. In simple words, the benefits of having a warehouse should outweigh the recurring administrative expense in order for a warehouse to be profitable for the company.
(ii) Not Helpful in increasing Sales: Warehouses can only help in maintaining the constant supply of goods for meeting demand from the consumers but if the company is thinking that setting up warehouses will help in increasing the sales than the company is wrong as sales can only increase when a company has a good product as well as a good marketing strategy. In simple words, warehouses can play a good supporting role in ensuring that the company never runs out of the product but if the company’s product is not good then having a warehouse is of no use and will lead to wastage of the company’s resources.
11. How many types of warehouse are there on the basis of products being stored?
Ans: On the basis of products being stored there are five types of warehouses.
They are:
(i) Commodity Warehouses: These warehouses are constituted for storing commodities like wheat, rice, sugar, lentils, tobacco, cotton, etc, Non-food commodities like jute, fertilisers, wood pulp etc. The materials stored here are generally packed in gunny or HDPE bags. In India most of agricultural commodities are handled by Central and State Warehousing corporations. Though the private sector too has now entered into commodity storing business.
(ii) Bulk warehousing:
(a) Bulk cargo is commodity or cargo that is stored and transported unpackaged in large quantities Solid Bulk: Grain, Iron ore, Cement, Coal, Urea, Soda ash, Flour, Polyethylene, Sugar, Plastic granules etc.
(b) Liquid Bulk: Cooking Oil, Milk, Fruit Juices, Chemicals, Gasoline, Liquefied natural gas (LNG), Petroleum etc.
(iii) Hazardous Warehouses: These warehouses are used to store Hazardous chemicals. As these are carrying hazardous material, their warehouses take numerous actions for the safety of people, material and equipment. They are generally built away from residential colonies, industrial areas and petrol pumps. These warehouses need to obtain several approvals and licences from the Government before being operated.
(iv) Spares Parts Warehousing: These warehouses are specialised warehouses built to store spare parts. Spare Parts are required in various industries like Automobile, Consumer Durables, Engineering Goods, Mobile etc. These warehouses are characterised by a large number of SKU (Stock Keeping Units). These warehouses carry various types of bins to store material of different sizes. The team in the warehouse is specially trained for identification of the material or the warehouse needs to strictly implement a WMS system.
(v) General Merchandise warehouses: These warehouses are used to store goods that can be easily handled and operated and do not require any controlled environment. Material like consumer goods, consumer durables, mobiles, electrical goods, electronic items and paints etc., fall under this category. The goods may be stored on ground or vertically on racks. These kinds of warehouses are easy to scale or shift. These warehouses could be multi-user facilities where more than one company can store material under a single roof.
12. What are the benefits of warehousing?
Ans: Following are the benefits of warehousing:
(i) Storage: This is the basic function of warehousing. Surplus commodities which are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers.
(ii) Price Stabilisation: Warehouses play an important role in the process of price stabilisation. It is achieved by the creation of time utility by warehousing. Fall in the prices of goods when their supply is in abundance and rise in their prices during the slack season are avoided.
(iii) Financing: Loans can be raised from the warehouse keeper against the goods stored by the owner. Goods act as security for the warehouse keeper. Similarly, banks and other financial institutions also advance loans against warehouse receipts. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations.
(iv) Grading and Packing: Warehouses nowadays provide the facilities of packing, processing and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner.
(v) Protection and Preservation of goods: Warehouses provide necessary facilities to the businessmen for storing their goods when they are not required for sale. It provides protection to the stocks, ensures their safety and prevents wastage. It minimises losses from breakage, deterioration in quality, spoilage etc. Warehouses usually adopt latest technologies to avoid losses, as far as possible.
(vi) Regular flow of goods: Many commodities like rice, wheat etc. are produced during a particular season but are consumed throughout the year. Warehousing ensures regular supply of such seasonal commodities throughout the year.
(vii) Continuity in Production: Warehouse enables the manufacturers to carry on Warehouse production continuously without bothering about the storage of raw materials. It helps to provide seasonal raw material without any break, for production of finished goods.
(viii) Convenient location: Warehouses are generally located:inconvenient places near roads, rail or waterways to facilitate movement of goods. Convenient location reduces the cost of transportation.
(ix) Easy handling: Modern warehouses are generally fitted with mechanical appliances to handle the goods. Heavy and bulky goods can be loaded and unloaded by using modern machines, which reduces the cost of handling such goods. Mechanical handling also minimises wastage during loading and unloading.
(x) Useful for small businessmen: Construction of their own warehouse requires heavy capital investment, which small businessmen cannot afford. In this situation, by paying a nominal amount as rent, they can preserve their raw materials as well as finished products in public warehouses.
13. Discuss the features of an ideal warehouse.
Ans: An Ideal warehouse constitutes of the following features:
(i) Proper Location: For effective movement of goods and cost saving, warehouses should be established at places, which are convenient to both the buyer and the seller. These warehouses should be set up near railway stations, major highways, seaports and airports, where goods can be loaded and unloaded conveniently. It is also recommended to have godowns in open places so that the vehicles can move around easily.
(ii) Use of Mechanical Appliances: In the warehouses, mechanical appliances should be used to load and unload the goods. It not only results in safety of men and material but also reduces wastages in handling goods and overall handling costs.
(iii) Sufficient Space: For an ideal warehouse, adequate space should be covered for maximum storage and to keep the goods in proper order.
(v) Proximity to the Market: The warehouses should be established at a place where the market for raw materials and for selling finished goods is as close as possible. This is the reason that big warehouses are close to commercial places or bus stands.
(vi) Parking Facility: Parking along roads, public places in the urban/suburban areas continue to be a harrowing experience for the traders who visit from outstations. Hence, in warehouses, proper arrangements should be made inside the premises to assist quick loading, unloading and safe parking.
(vii) Safety Measures: A warehouse, which basically is used to store eatables or perishable goods like bread, butter, fruits, eggs and vegetables should be equipped with facilities like proper cold storage, moisture resistance etc. Further, efforts should be made to secure the warehouse against possibilities of theft and damage from heat, rainwater, insects, pests and fire. The use of fire extinguishers, safety alarms and round the clock security arrangements should be there to secure warehouses from unforeseen mis-happenings.
(viii) Economical: The warehouse location, layout, construction and maintenance should be done in such a way that ensures maximum storage of goods at minimum expense.
(ix) Proper Management: If warehouses are not managed properly, all the money spent will go to waste. Mismanagement may lead to theft, loss, errors and omissions of goods stored by various traders. Hence, a strict control over the warehouse is essential on a permanent basis. A permanent officer should be appointed for proper arrangements of incoming and outgoing goods.
