Importance of Warehouse for Logistics Companies

Warehouse might be seen only as a place for storage, but just a few comprehend the economic and service paybacks are hidden underneath. Warehousing is a vital part of the entire supply chain which integrates operations and allows functions of similar nature to be performed under one roof. Let us find out the importance of warehouse for logistics companies:

1. Economic Benefit: Warehouses are indispensable especially when the product in question is high in demand. Instead of supplying from various nodes, warehouses provide the benefit of accumulation and consolidation. By accumulating the inventory at one place, it is easier to sustain stock as well as merge shipments together. This approach results in sizeable savings from the economies of scale point of view.

2. Assembly Point: Final products consisting of multiple parts from different facilities require being assembled before final distribution to the customer. Warehouses act as a central point for production assembly. Modern warehouses even allow logistic companies to pack and grade their products according to the consumer needs.

3. Reverse Logistics: Warehouses serve as a single point for returns on shipments. This way companies can administer their returns more efficiently. The focal point of supply when turns into the focal point for reverse logistics, helps maintain the correct levels of inventory and a seamless supply chain.

4. Storage: Warehouses cut down the time between production and consumption of goods by enabling storage of a buffer stock of the products. It particularly helps with seasonal products which even though produced only during a few months, need to uphold a stable supply throughout the year.

5. Value Addition: Warehouses add considerable value to the entire logistics process by reducing the cycle time. Storing goods in a warehouse facilitates proper management of inventory and businesses can make better replenishment and other decisions.

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