e Options

1. Private warehouse 2. Public warehouse 3. Contract warehouse

Warehous

For acquiring warehouse space, the following three options are available:

Consideration for exercising these options depends on various factors such as product characteristic, demand fluctuations, investment, cost of operation, degree of control, sales economics etc.
Private warehouse:

Private ownership of storage facility refers to having the entire facility under the financial and administrative control of the firm, i.e. the firm owning the product operates the warehouses. The facilities may either de owned by the firm or taken on lease, for a period of three to five years. The decision as to which strategy best fits an individual firm is essentially financial. Often it is not possible to find a warehouse for lease that fits the exact requirement of a firm. For example, a warehouse requires substantial material-handling activities. Existing or leased facilities may not be adequately designed. As a general rule, an efficient warehouse should be planed around a material-handling system is order to encourage maximum efficiency of product flow. Private ware house are circumstances, such as: an attractive proposition under certain

1) Product specific material handling and strongly facilities are require, which are not available with other options. 2) Volumes handled are high, ensuring full capacity utilization and benefits of scales economics. 3) A high degree of control over the operations is required.
Benefits of privates warehousing: 1) Control: Private warehouses provide more control science the

enterprise has absolute decision-making authority over all activities and priorities in the facilities. The ability to integrate warehouse operations with the rest of the firms internal logistics process.
2) Flexibility:

Private warehouses generally offer more flexibility science operating policies and procedures can be adjusted to meet

unique needs. Firms with very specialized customers or products are often motivated to develop their own warehouse facilities.
3) Cheaper: Private warehousing is usually considered less costly than

public warehousing because private facility costs do not have a profit mark-up. As a result, both the fixed and variable cost components should be less.
4) Intangible

Finally, private warehousing has some intangible benefits, particularly with respect to market presence. A private warehouse with a firms name on it may produce customer perceptions of responsiveness and stability. This perception sometime provides a firm with a marketing advantage over other enterprises.

benefits:

Extra advantages: 1) Advantageous for a company with very high turnover of inventory

and mass production. 2) Greater management control over the operation of warehouse. 3) Technologically sensitive activities for e.g. final assembling of product can be undertaken in the warehouse, as there is no interference of any external agency.

Suitability of warehouse:

The ownership of a private warehouse is suitable in following area: 1) Mass production Company. 2) Generally stable demand and supply conditions throughout the year. 3) Achieving cost efficiency through maximum utilisation of warehouse facilities.