Private versus public warehouse

Private versus public warehouse

2008

Private versus public warehouse

Warehouse and Supply Chain

Nowadays , manufacturing and services firms face growing challenges to increase profit margins amidst increasingly fiercer competition . Under such circumstances , industry analysts and supply chain experts suggest manufacturers and service providers to promote more effective supply and demand planning , management , and execution as the means to unlocking significant gains in margins

According to Search CIO (2007 , SCM refers to management of information materials , and finances along a chain of process from suppliers to manufacturers and then

from manufacturers to customers . The interests in the discussion of supply chain management occur since it relates to costs reduction in all aspects of business process especially regarding the inventory reduction that suggests manufacturer produce goods when needed

In this situation , the selection of type of warehouses play significant role since it determines the SCM strategy for a company . In general there are two types of warehouses : private and public warehouses

Private Warehouse

By definition , private warehouse is type of warehouse that directly maintained and operated by the owner of products or goods that are stored in it . Meanwhile , the warehouse facility itself could be happened to be privately owned or leased (Seaboard Warehouse Terminals , 2004

Public Warehouse

The other type of warehouses is public warehouse . Unlike private warehousing , public warehousing provides greater efficiency for a company since one warehouse is designed to design multiple logistics Figure 1 shows typical design for warehousing needs in which the selection of public and private warehousing depends on the needs

Figure 1 Warehouses Needs Classifications

Public Warehouse versus Private Warehouse : Consideration

Like outsourcing decision , the selection of type of warehousing that is suitable for a company . And according to comparison based on several factors , the public warehousing is considered beneficial than private warehouses as following

Costs Reduction

Public warehousing does not require a company to have dedicated human resources /personal to operate the warehouses facility

The handling and storage fee is predictable

the warehouse costs can be translated into the storage costs to volume that would help marketing department to include this costs in the pricing scheme of the products

Reduced Risks

Since a company works with third party in managing their stocks , they will be free from any labor disputes

A company who leases the warehouses (depositor ) will get rid of administrations issues such as warehouses safety , labor remuneration etc

Better Efficiency

A company will have better logistics management that also includes the transportation and inventory managements

Reference

REM Associates (2008 . White : Warehousing Ownership Considerations - Private versus Public /Contract . Retrieved April 14 , 2008 from http /www .remassoc .com /portals /0 /remwpwoc .pdf

Seaboard Warehouse Terminals (2004 . ANSWERS TO COMMON QUESTIONS Retrieved April 14 , 2008 from http /www .seaboardwarehouse .com /faqs .htm

Search CIO (2007 . Supply Chain Management . Retrieved April 14 , 2008 from HYPERLINK "http /searchcio .techtarget .com /sDefinition /0 ,sid19_gci214546 ,00 .html http /searchcio .techtarget .com /sDefinition /0 ,sid19_gci214546 ,00 .html

YAO Kao-hua , LIU Chang-chuan (2006 . An Integrated Approach for Measuring Supply...