The Importance of the Warehouse to Small Business
December 27, 2017 by Susan Brooks
If you have a warehouse then do not underestimate its importance to the overall logistics solutions that form the backbone of a well-maintained business supply chain. Effective use and organisation of your warehouse can be the difference between company logistics that are a money saving asset or a drain on resources.
What is it?
So what is a warehouse? A big empty space for receiving and storing stuff until you need it or until it gets shipped out?
Well.… actually that is quite accurate to be honest. But at the same time, it is so much more!
The warehouse provides an excellent, centralised point for the receiving of the raw materials that your business needs to produce the goods that become your products. This means that, with the storage of the raw materials moved to a different site, the production sections of your business can get on with doing exactly that – producing. More space can be given to machinery and staff once the materials are bulk stored elsewhere.
The same goes with the dispatch of your product. By keeping the finished products away from the production area, they can be stored and set aside ready for delivery without affecting the ongoing production of the next line of goods.
This storing of both the inbound raw materials and the outbound finished products will provide certain economic benefits.
For one thing, by concentrating these two things you can achieve economies of scale that can lead to cost savings. For example, with the inbound raw materials. If you have a storage area like a warehouse you can potentially order these materials in the kinds of bulk that can lead to discounts in both purchasing and delivery.
When it comes to delivery of completed products, again by grouping in the warehouse you can save money. This time though it will be with delivery costs. A small storage area that quickly fills with product may lead to daily collections by logistics companies, maybe even more frequently. A shipping area in a warehouse means you can set the terms for collection much easier, waiting until you have sufficient finished products stocked up to require a collection.
Finally, you should look at your warehouse as a buffer against disaster. Say for example the supplier of a key raw material goes out of business overnight. The business that has not planned for the long term only has sufficient supplies of this material to continue production for a couple of days. After this, production grinds to a halt, unless a rush delivery of materials is sent through from a new supplier – either option is going to hit your bottom line.
The well-prepared business keeps sufficient stocks of raw materials in their warehouse to weather such disasters until a new supply can be sourced, and no production time is lost – and of course you take no financial penalties either.
As you can see, a well-utilised warehouse is a seriously effective tool for the efficient small business.