CHAPTER 8

Warehousing is one of the functions of marketing. The place where the goods are stored is called as warehouse. The term “ware” means products. Storage or warehouse is generally located near the factory to keep the raw material and finished products. Storage is only a holding place. Whereas, the warehouse is located near the market to perform the other marketing functions such as grading, standardization, blending, mixing, packing etc. Therefore, we may say that a warehouse holds goods as a distribution center. The development of science and technology has improved the ways and means of storage.

“A warehouse is an establishment for the storage or accumulation of goods”. It is a place where the goods are stored for future use. Depending upon the nature of the products to be stored, warehouses are designed. To keep the fruits and perishable goods, cold storages are needed. Certain drug products are to be kept in suitable temperature. Liquids like petrol, oil, molasses need tanks while grains like barley, pulses etc., need ventilated halls.

» Warehousing removes the hindrance of time by storing or warehousing without which much of the goods produced will be useless and there may not be any incentives for production. The following factors show the necessity for warehousing:

1. Mass Production: Production is based on the anticipated demand for goods. Mass production of goods takes place by establishing big factories and modern machines. The markets for such goods are spread all over the country Therefore warehouses have to be built at different places to store these products to provide prompt supplies at various centers when demanded. 2. Nature of commodities: Some commodities are perishable in nature and therefore it should be consumed in time to avoid deterioration. Storing them in cold storages can extend the consumption period. For example, fruits, vegetables, eggs, butter and the like are stored in storages as they are perishables.

3. Seasonal Production but Regular Consumption: Many commodities, especially the farm products such as wheat, sugar pulses etc., are produced only in seasons. However, consumption is evenly spread throughout the year. If storage is not provided, these commodities become waste and get deteriorated and during the off-season periods, it would become scarce. Therefore, storage at suitable warehouses is needed. 4. Regular Production but Seasonal Consumption: In anticipation of the demand in seasons certain goods are produced regularly. For example, ready-made garments, blankets, electric fans etc., Therefore these goods would require storage so that it can be released in large quantities to meet the heavy demand in seasons.

5. Proximity to production centers: Storage at different centers are required to supply the goods in time and without interruption. For this purpose goods are regularly fed to the warehouses situated at different market areas and thereby making them available easily to wholesalers, retailers and other dealers. In turn they will be sold to the ultimate consumers. 6. Storage of Raw materials for mass production: Some raw materials are to be made readily available to facilitate continuous mass production. Therefore, such types of materials are kept in warehouses to be supplied to the production center as and when required. For example raw cotton is purchased from the markets and warehoused for supplying the same to the production place.

7. Storage to keep buffer stocks: To avoid interruption in production and to avoid the danger of non-availability of commodities, certain minimum stock is to be stored. Therefore, storage is essential. 8. Storage for speculative purposes: Certain commodities are kept in the warehouse for sometime to get better prices for them. These are stored to get profit out of fluctuations in prices, till such time the goods are to be kept in the warehouse.

1. Protection of Goods 2. Price stabilization 3. Storage of goods 4. Equalization of demand and Supply 5. Facilitating Business Finance 6. Preparation for sale 7. Delivery to the buyer 8. Widening the marketing area 9. Concentration on production 10. Conditioning the products

On the basis of ownership warehouses can be classified into the following types: 1. Private 2. Public 3. Co-operative On the basis of services, warehouses can be classified into the following types: 1. Bonded 2. General merchandise 3. Special commodity 4. Cold storage 5. Field godown 6. Household 7. Grain elevators 8. Yard storage 9. Institutional

1) Warehouse warrants: This is a document issued in favor of the owner of the goods by the warehouse keeper. This is a document of title to goods and can be transferred by simple endorsement and delivery. To transfer all the goods the warehouse warrant is sufficient. If only a part of the goods are to be transferred then delivery order is needed. The delivery order is to be accompanied by the warehouse warrant. The warrant will be delivered to the owner of the goods after making suitable entries about the goods delivered. 2) Dock warrant: Dock is a place in the harbour where the goods are loaded into the ship. Dock warrant is a document of title to goods issued by dock authorities. This document certifies that the dock authorities hold the goods. To take delivery of the goods this certificate should be given back to the authorities. The right of getting delivery of goods can be assigned to third parities.

3) Dock receipt: Dock receipt is an acknowledgement of receipt of the goods issued by dock authorities to the owner of the goods. It is not a document of title to goods. Therefore, the right of taking delivery of goods cannot be transferred. 4) Delivery order: This is a document through which the depositor directs the warehouse keeper to deliver the specified goods either to the party mentioned in the document or to the bearer. The warehouse keeper delivers the goods as per the instructions. Transfer of ownership takes place through this document.

5) Warehouse keeper’s Certificate: This is a document issued by the warehouse keeper, which acknowledges the receipt of the goods from the depositor. It also shows the existence of an agreement to keep the goods in the warehouse subject to certain conditions. This is not a document of title to goods and is not transferable. The warehouse keeper can deliver the goods only after receiving the delivery order from the depositor. The delivery order may be for all or a part of the goods deposited.