Under what conditions could it make sense to combine public and private warehouses in a logistical system?... [Show More]

By CPA Guru 9 months ago

Answers to the above Question

Warehousing may be termed as one of the most important auxiliaries of commerce. It creates time utility by bridging the time gap between production and consumption of commodities. Across the supply chains, warehousing is considered as a significant element of activities in distribution of commodities, from raw materials and work in progress through the finished commodities. Warehousing is considered as an integral part to the supply chain in the context of logistical system within which it operates and as such its functions and objectives should synchronize with the objectives of the supply chain. Several analysts have commented that the notion of amalgamating public and private warehouses in logistical system is an issue that should be highly sensitized. However, the paper presents the conditions under which the amalgamation of public and private warehouses could make sense in a logistical system. According to Bowersox et al. (2011) both public and private warehouses exist to support marketing, distribution and manufacturing effectiveness. While, the major role of public warehousing has been traditionally to stock inventory, amalgamation of public and private warehouses encompasses a broader value proposition in the context of economic and service benefit in regard to logistical system. In the same sense economic benefit of applying private and public warehouses in logistical system encompass consolidation, sorting, bulk-breaking, seasonal storage, and reverse logistics while service benefit encompass spot-stocking, full-line stocking, and the value added services. The notion of warehousing is transforming from a traditional storage objective to one characterized by customization, velocity and movement. In fact, distribution centers and warehouse are designed to accommodate the primary operations of the inventory handling and storage. As noted by Fernie (2007), warehousing encompasses crucial logistical processes and receiving inbound shipment like in stage handling to move between various storage sections, such as bulk, long-term, and picking and staging shipment to clients . Active storage enhances cross-docking, consolidation, postponement, and break-bulk. Extended storage operations may effectively enhance balancing supply, demand, and speculation in the logistical process on condition that both private and public are merged. Warehousing is usually categorized on the basis of ownership. A private warehouse is managed by the enterprise that also owns the merchandise in the facility. On the other hand, a public warehouse is managed independently and offers different for-hire value -added services. A contract warehouse may be termed as a long-term business arrangement that offers tailored services for a limited number of clients. According to Linder and Boortz (2014) an integrated warehouse technique often incorporates a combination of warehouse ownership options. The need to combine both public and private warehousing is ideally inevitable since there is need for proper storage or warehousing for different commodities from where they can be supplied as and when required. As a result of large scale production in several cases of manufacture goods, the idea to amalgamate both private and public should be highly sensitized. This is because manufactures produce goods in huge quantities to enjoy the profits of large scale production, which is more economical when public and private warehousing are combined. In the same sense, there is need for properly storage of finished products till they are cleared by sales. Both industrial as well as agricultural commodities are produced at some specific places but consumed throughout the entire nation. As a result, it is essential to consider the combination of both private and public warehouses for proper storage of goods near the place of consumption. All the forgoing cost factors operate well in both public and private warehousing. However, in public warehousing, the expenses are distributed over quite a number of consignments of their concerned clients. Moreover, in most cases, the aspect of combining both public and private warehousing can provide an advanced service with greater flexibility for the end client. A company running both private and public warehouses will have to evaluate the cost incurred with the total figure for the comprehensive service through the warehouses. In conclusion, it is considerable to apply both public and private warehousing with regard to the products and client base in the logistical process. In addition, since private warehouses need to be owned, they may be rented or leased with or without the resource handling and other office equipment. On the other hand, in a public warehouse, the warehouse staff’s integrity is the only security for the owner of the goods, hence the need to combine both private and public warehouse to realize success in logistical process is inevitable.

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