A one-bedroom apartment and Oprah Winfrey’s 20,000+ square foot mansion in California are both technically considered “housing.” But the similarities stop there: no one would say they’re on equal footing.
And the same could be said for warehouse facilities.
To the average person, a warehouse is just that: a warehouse. However, there are all different types of warehouses (gasp) and the type your organization utilizes can impact your supply chain in unique and significant ways. Take e-commerce businesses, for instance. Their warehousing needs stem beyond simply finding a space to store products to include complementary services, like packaging and order fulfillment.
Identifying the right warehouse for your company’s needs will play an integral role in everything from profitability to customer retention. Because at the end of the day, your business’s success is contingent upon the efficacy of your entire supply chain, and how processes are managed every step of the way. To ensure you are setting your business up for sustainable growth, let’s take a look at the different types of warehouses on the market. Welcome to Warehousing 101 — class is in session.
Qualities of a Good Warehousing Partner
While different types of warehouses will have their own set of unique characteristics and use cases, there are some general qualities to look for across the board. A safe and efficient warehouse will check off the following boxes:
- Market proximity and accessibility
- Advanced technology
- Strong safety and security protocols and processes
- Robust software and service offerings
- Strong quality assurance measures
- Expertise (including trained staff)
- Flexible and customizable solutions
- Prompt delivery
- Organized picking and receiving procedures
- Excellent customer service
The Different Types of Warehousing
Whether your business is rapidly expanding, you sell products in multiple markets, or you need a facility that can manage your inventory more efficiently, the type of warehousing you use can make or break your success.
Plus, depending on your needs, you may need to find a warehouse partner that can accommodate specialty areas like temperature-sensitive goods. Here’s a look at some of the various types of warehouses in the supply chain to help move the needle forward for your business.
1. Public vs. Private Warehouses
Pepsi or Coke? Right or left? Public or private? If you are deciding between utilizing a public or private warehouse space, here’s a little food for thought. Operating a private warehouse often requires a lofty capital investment. From purchasing and maintaining the property to investing in forklifts, safety equipment, and storage racks, your business would be responsible for controlling every facet of your fulfillment and logistics needs. And that can be a massive undertaking. Some businesses and manufacturers do opt to purchase their own warehouse space and leverage it as an extension of their brand.
The caveat here is shouldering the burden of higher operating costs across the board — i.e., maintaining the building and equipment, labor expenses, costs associated with sitting inventory, and so on. Furthermore, in today’s competitive landscape, businesses need strategically dispersed warehouses in key markets to adequately meet consumer demand and the expectation of speedy delivery. And let’s not forget, there are special certifications, insurance requirements, and quality standards you would need to account for.
On the other end of the spectrum, you have public warehouses, also referred to as third-party logistics (3PL) warehouses. A public warehouse serves as an outsourced logistics partner with all the infrastructure, equipment, technology, and workflow already implemented and ready to go.
A public warehouse can be a slam dunk in more ways than one. Funds your business would have utilized to purchase the space can be diverted to other aspects of the business, like penetrating new markets, expanding your sales force, or driving new marketing initiatives. (Hello, strong bottom line!) Your company also won’t be liable for property taxes or training new staff members to assure compliance is maintained. Public warehouses often offer value-added services as well, like inventory control and transportation. Think of it like this: you’ll have a bevy of staff dedicated to optimizing efficiency across your supply chain and they aren’t even on your payroll. Sounds like an ideal strategy, right?
2. Bonded Warehouses
A bonded warehouse is utilized to store imported goods before they are processed by customs. This type of warehousing can be privately owned by large enterprises or government-owned and is used for businesses with goods crossing international waters. Duties and taxes on bonded goods do not need to be paid in full until the item is ready to be released for delivery. This gives businesses that import products the ability to safely store items duty-free.
3. Smart Warehouses
Smart warehouses are facilities that utilize innovative technology, like AI, to streamline processes and provide enhanced visibility across the supply chain. Automation can include anything from inventory management software to robots and drones to move, pack, scan, and weigh goods. Plus, smart warehouses are great for any business wanting real-time inventory management and insights. Smart warehouses can greatly decrease human error and accelerate the fulfillment process. With this type of warehousing, and the technology in place, all your warehouse management needs are optimized.
4. Consolidated Warehouses
Another type of warehouse in the mix is a consolidated warehouse. A consolidated warehouse secures small shipments from various suppliers, assembles them into a single, larger shipment, and distributes them to retailers and end-users. One thing important to keep in mind with consolidated warehouses is that all the shipments are meant for the same geographical location. Consolidated warehouses provide a highly economical order fulfillment solution for new startups and small businesses.
5. Government Warehouses
As the name suggests, this type of warehousing is owned, managed, and controlled by the government or public authorities. Government warehouses typically charge affordable rates, providing greater access to storage facilities for farmers, small businesses, and similar entities. Some drawbacks to consider: government warehouses reserve the right to search inventory and can seize control of goods if rent is not paid within the allotted time frame.
6. Cooperative Warehouses
Similar to government warehouses, cooperative facilities are owned and controlled by cooperative associations. These organizations provide affordable storage rates, but for their members only. This type of warehousing is primarily leveraged to support cooperative members as opposed to driving profitability. Cooperative warehouses are generally beneficial for farmers and traders, or similar tenancies.
Which Type of Warehouse Is Best for Your Business?
To meet shifting market demands, today’s businesses must remain agile and utilize solutions that drive efficiency through the entire supply chain. Harnessing technology, like real-time inventory updates and predictive analytics that forecast product demand, and finding a 3PL provider that can handle your supply chain from start to finish is the key to maximizing your business’s ROI.
At Smart Warehousing, we know every business is unique. That’s why we build customized solutions to accommodate everything from omnichannel fulfillment to cold chain management. With more than 12 million square feet of warehousing space across 38 locations from coast to coast, we can accommodate two-day shipping to drive customer satisfaction and strengthen brand reputation.
To learn more about how the Smart Warehousing team can help your company scale and achieve your business goals, contact us today.