Different Types of Warehousing in Logistics – Shipyaari Blog

What is Warehousing?

Warehousing is an essential part of the supply chain in India, providing for storing and distributing goods. However, not all warehouses are the same, and different types of warehouse can offer different advantages and disadvantages, depending on the needs and goals of the business. 

In this blog, we’ll discuss the different types of warehouse : public, private, and contract warehouses in India.

Public Warehouses

Public warehouses are owned and operated by third-party logistics (3PL) providers, who offer storage and distribution services to multiple clients. Public warehouses are usually located in strategic locations, such as near transportation hubs or industrial parks, and offer a range of services, such as inventory management, order fulfillment, and value-added services.

Advantages of Public Warehouses

Public warehouses can offer several advantages, such as:

Cost savings

Public warehouses can help businesses reduce their capital expenditures, such as buying or leasing warehouse space, equipment, and personnel. Public warehouses can also help businesses reduce their operating expenses, such as labor, utilities, and maintenance, by sharing resources and knowledge with other businesses.

Flexibility and scalability

Public warehouses can help businesses adapt to changing demand and customer preferences, by providing flexible and scalable solutions, such as on-demand storage, pick-and-pack, and cross-docking. Public warehouses can also help businesses expand their reach and market share, by providing access to a wider network of warehouses and distribution channels.

Expertise and technology 

Businesses can also benefit from the knowledge and experience of the 3PL provider, who can offer best practices, industry standards, and regulatory compliance. Public warehouses can also help businesses benefit from the technology and innovation of the 3PL provider, who can offer advanced systems, software, and equipment.

Disadvantages of Public Warehouses

Public warehouses can also have some disadvantages, such as:

Limited control

Public warehouses can limit the control and visibility of the business over its inventory and operations, as the 3PL provider may have its own policies and procedures. Public warehouses can also limit the customization and personalization of the business, as the 3PL provider may have to serve multiple clients with different needs and preferences.

Limited security

Public warehouses can pose some security risks, such as theft, damage, or loss of the inventory, as the 3PL provider may not have the same level of security measures and protocols as the business. Public warehouses can also pose some liability risks, such as product liability or regulatory compliance, as the 3PL provider may not have the same level of insurance and legal coverage as the business.

Private Warehouses

Private warehouses in India are owned and operated by the business itself, and are used exclusively for its own storage and distribution needs. Private warehouses can be located anywhere in India, depending on the needs and preferences of the business, and can offer a range of services, such as inventory management, order fulfillment, and value-added services.

Advantages of Private Warehouses

Private warehouses can offer several advantages, such as:

Control and customization

Private warehouses can offer the business full control and visibility over its inventory and operations, as the business can design and implement its own policies and procedures. Private warehouses can also offer full customization and personalization, as the business can tailor the warehouse to its own needs and preferences.

Security and liability

Private warehouses offer full security and liability protection, as the business can implement its own security measures and protocols, and can have its own insurance and legal coverage.

Disadvantages of Private Warehouses

However, private warehouses can also have some disadvantages, such as:

Cost and risk

Private warehouses can be expensive and risky to own and operate, as the business has to invest in the fixed costs of warehouse space, equipment, and personnel, and has to bear the variable costs of maintenance, utilities, and insurance. Private warehouses can also be risky as the business has to bear the risks and uncertainties of owning and operating a warehouse, such as fluctuations in demand, changes in regulations, or unexpected events.

Limited flexibility and scalability

Private warehouses can be limited in their flexibility and scalability, as the business has to adjust its storage and distribution needs according to its own demand and capacity, without the benefit of sharing resources and knowledge with other businesses.

Contract Warehouses

Contract warehouses in India are owned and operated by 3PL providers, who offer storage and distribution services to a single client, under a long-term contract. Contract warehouses are usually located near the client’s facilities or customers and offer a range of services, such as dedicated space, equipment, and personnel, and customized policies and procedures.

Advantages of Contract Warehouses

Contract warehouses can offer several advantages, such as:

Control and customization

Contract warehouses can offer the client full control and visibility over its inventory and operations, as the client can design and implement its own policies and procedures, and can have dedicated space, equipment, and personnel. Contract warehouses can also offer the client full customization and personalization, as the client can tailor the warehouse to its own needs and preferences.

Security and liability

Contract warehouses can offer the client full security and liability protection, as the client can implement its own security measures and protocols, and can have its own insurance and legal coverage.

Flexibility and scalability

Contract warehouses can offer the client flexibility and scalability, as the client can adjust its storage and distribution needs according to its own demand and capacity, with the benefit of dedicated resources and knowledge from the 3PL provider.

Disadvantages of Contract Warehouses

Contract warehouses can also have some disadvantages, such as:

Cost and risk

Contract warehouses can be expensive and risky to own and operate, as the client has to invest in the fixed costs of warehouse space, equipment, and personnel, and has to bear the variable costs of maintenance, utilities, and insurance. Contract warehouses can also be risky as the client has to bear the risks and uncertainties of owning and operating a warehouse, such as fluctuations in demand, changes in regulations, or unexpected events.

Limited network and expertise

Contract warehouses can be limited in their network and expertise in India, as the client may not have access to the same level of resources and knowledge as in a public warehouse, or may not benefit from the same level of innovation and technology as in a private warehouse.

Conclusion

Understanding the different types of warehousing: public, private, and contract warehouses in India, can help businesses make informed decisions about their storage and distribution needs. 

By choosing the right type of warehouse or outsourcing warehouse, businesses can optimize their supply chain and logistics, and enhance their customer satisfaction and loyalty. By partnering with a reliable and reputable 3PL provider, businesses can ensure a smooth and successful warehousing experience and help you scale up your ecommerce logistics requirements. 

 

FAQs

Q. What are the major types of warehousing?

A. Warehousing refers to the process of storing goods and materials. There are three primary types of warehouse: public, private, and contract. Public warehouses are operated by third-party logistics providers for multiple businesses, private warehouses are solely owned by individual businesses, and contract warehouses are owned by 3PLs but serve one client exclusively under a long-term agreement.

Q. What are common warehouses?

A. The most common types of warehouse include public, private, and contract warehouses. Public warehouses serve multiple businesses, private warehouses are used exclusively by a single business, and contract warehouses are dedicated to a single client under a long-term agreement.

Q. What to look for when choosing a warehouse?

Factors like local environmental considerations, proximity to manufacturers, suppliers, and the market or markets being served is important to take into account. Any new warehouse must to be situated as close as feasible to significant manufacturers, distributors, and/or clients. This will improve responsiveness, cut down on lead times, and save transportation expenses.

Q. Who uses warehouses?

A. Warehouses are used by several business types such as manufacturers, wholesalers, retailers, ecommerce businesses, D2C businesses, and logistics companies.

Q. What are the uses of warehouses?

A. Warehouses typically serve multiple functions, the most common being storing inventory. Other functions include managing inventory levels, order fulfillment, consolidating goods for transportation, providing other value-added services like packaging or labeling, overall enabling efficient distribution and logistics operations.