What is Warehouse Ownership?

Topics: Logistics, Supply chain management, Inventory Pages: 7 (2063 words) Published: October 5, 2014
What is Warehouse Ownership?

Warehouse ownership can be defined or arranged based on different type of ownership. A private warehousing is operated and owned by the business organization that handle the merchandise and stored in the facility. A public warehousing is operated as an independent business offering a range of for-hire services, such as storage, handling, and transportation. Public warehouse operators generally offer a menu of relatively standardized services to customers. Contract warehousing is a customized extension of public warehousing that combines the benefits of private and public warehousing. It is a long-term business arrangement that provides unique or tailored logistics services for a limited number of customers. The client and the warehouse provider typically share the risks associated with the operation. The important differences between contract and public warehouse operators are the anticipated length of the relationship, degree of exclusive or customized services, and shared incorporation of benefits and risks.

Private Warehouse

A private warehouse, as a type of warehouse ownership classification, is operated by the firms or organization that owns the products stored in the facility. These firms or organizations may be factories, trading companies or wholesalers. The building of the warehouse can be owned or leased. The critical point for a firm to decide whether to own or lease the facility is the financial concern. Sometimes it is not possible to find a proper warehouse to lease that fits the specialized logistical requirements. Take an interlining supplier for example; the storage racks or other physical nature in a leased building may not be suitable for the storage for interlining products like woven interlining, non-woven interlining and fusible interlining. Under this circumstance, design and arrangement need to be taken place for construction. On the other hand, at a particular connection for logistic purposes, a firm may have difficulties in finding a warehouse for ownership. The major benefits of a private warehouse are flexibilities, control, cost and some intangible attributes. A private warehouse is more flexible than a public one, as the operating policies and process can be adjusted to meet the special needs of a customer or the product itself. Also, a suitable course of action can be taken to meet specific requirements for logistic purposes. Private warehouse offer stable control since the firm has the sole authority on warehouse management to optimize activities. For example, the control on warehouse operations for an interlining product like woven interlining, non-woven interlining and fusible interlining can integrate with the logistic operations of an interlining supplier. Usually a private warehouse is considered less costly because private warehouse is built within the manufacturing base of a supplier. Therefore, the fixed and variable components may be lower than a public warehouse. Furthermore, a private warehouse is not profitable to the owner of the facility. A private warehouse may also have intangible benefits. For instance, a warehouse with the name of an interlining supplier for woven interlining, non-woven interlining and fusible interlining may provide marketing advantages. The customers may have the perceptions of stability and reliability towards the supplier. Despite the noted benefits, the use of private warehousing is declining because of an increasing managerial interest in reducing capital invested in logistical assets. Also, the perceived cost benefit of private warehousing is potentially offset by a public warehouse’s ability to gain operational economies of scale and scope as a result of the combined throughput of multiple clients. For example : Sheng Siong Sheng Siong is Singapore’s largest retailers with over S$687.4 million in revenue for FY2013. They are principally engaged in operating the Sheng Siong Groceries Chain, including...
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