Warehousing

Back to: COMMERCE SS1

 

Welcome to class! 

In today’s class, we will be talking about warehousing. Enjoy the class!

Warehousing

CONTENT

1. Importance of warehousing
2. types of warehouses
3. Factors to be considered in siting a warehouse
4. Documents used in warehousing

Warehousing is the act of storing goods produced or bought in a place until they are needed. Warehousing ensures that there is a regular and steady supply of goods. A warehouse is a place where goods are kept until they are needed.

Importance of warehousing

1. It provides protection and security for goods.
2. It encourages large scale production it ensures production of goods ahead of demand.
3. It helps to stabilize prices of goods by reducing the fluctuation of prices due to the supply level.
4. It facilitates the re-packaging and branding of goods.
5. It ensures a constant and steady supply of goods throughout the year.
6. It provides employment opportunities e.g. for warehouse keepers.
7. It is a source of income for the owners e.g. rent received etc.
8. It promotes emancipator purchases.

Types of warehousing

 1. Ordinary warehouse:

This may be called goods warehouse – i.e. where goods are stored by traders and manufacturer until they are needed. It could either be;

a) Wholesaler warehouse

b) Manufacturers warehouse

c) Public warehouse

2. Bonded warehouse:

This is a warehouse where goods whose customs duties have not been paid are stored until the duties are settled by the Owners.  A bonded warehouse is privately owned by are under the supervision of the Customs Authority. They are usually located near the port (seaport or airport) for storing goods until the duties are paid.

3. State warehouse (Queen’s warehousing or Government warehouse):

This is a warehouse where seized contraband goods (e.g. smuggled goods) are kept until they are sold on auction to members of the public.

Evaluation

1. List and explain five types of warehouse
2. Explain five importance of warehousing in commerce.

The usefulness of bonded warehouse in foreign trade

1. The bonded warehouse provides security (safety) for goods imported from other countries whose duties have not been paid
2. The importer will be allowed adequate time to pay the charged customs duties
3. It facilitates foreign trade
4. The period of bond enables the customs authority to have enough time to inspect the goods and calculate the actual value of import duties.
5. Goods in a bonded warehouse can be easily sold by the importer while in bond in which case the buyer will settle the import duty.
6. Production processes like branding, packaging, can be done while the goods are still in bond.

Factors to be considered in siting a warehouse

1. Location of the factory i.e. proximity of the warehouse to the factory
2. Nearness to the market
3. Nearness to the distribution centres
4. operating costs (running cost) involved in the operation of the warehouse
5. cost of building or renting the warehouse
6. The mode of transportation to be employed
7. Consumers buying pattern
8. Good road network and availability of other infrastructure e.g telecommunication
9. Regular power supply e.g. for frozen food items
10. Presence of security and safety.

Documents used in warehousing

1. Dock Warrant: This is the document issued by the warehouse authorities to the depositor of goods. It is a document of title transferable by endorsement
2. Delivery Order: This is a document issued by a dock warrant holder to enable a third party to collect a specified part of the goods from the warehouse.

Evaluation

1. Write short notes on the following    (a) Dock Warrant      (b) Delivery Order

2. Outline five factors to be considered in siting a warehouse

General evaluation

1. Explain six functions of the wholesaler to manufactures.
2. State six reasons why a producer may distribute goods directly to consumers.
3. List five advantages and four disadvantages of branding.
4. State five importance of warehousing to Commerce.
5. Give six reasons why manufacturers pre-package their products.

Reading assignment

Comprehensive Commerce SSS page 37-39

Essential Commerce for SSS page 107-115

 Theory

1. What is a warehouse?
2. State three ways in which warehousing is important to commerce.

 

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