A warehouse is a large facility in which goods are stored until they’re needed. But these spaces can be – and are – designed for different purposes and different storage needs. What’s suitable for a large grain distributor wouldn’t be right for a small ecommerce company, and what’s best for a large ecommerce company wouldn’t fit the requirements of a manufacturer.
We have narrowed these storage types down to eight, and we’re going to take a close look at them by exploring what each does and doesn’t offer. If we do our job right, you’ll have the information you need to decide which type of storage space is best for your company.
Types of warehouses
Sometimes referred to as proprietary, these are facilities that are privately owned by a company, be it a manufacturer, a wholesaler, or an ecommerce company. Best for larger companies due to the expense of maintenance and other costs, their main advantage is that by owning the building and having oversight of operations, the company can exercise much greater control over its inventory.
Private warehouses are best for:
- Larger companies that can handle the investment.
- Large retailers and wholesalers that carry significant amounts of inventory.
These storage units are owned by government and semi-government entities, the latter meaning they’re part public and part private. Public warehouses are a great option for small businesses that don’t have to store that much and may only need to do so for a limited amount of time. They’re also handy for ecommerce startups that aren’t yet big enough to have their own facility.
Public warehouses are best for:
- Small companies and startups that only need storage space for a limited amount of time.
- Companies that aren’t big enough to invest in their own facility.
While warehouses simply store goods until they’re needed, distribution centers act as hubs. They take in a lot of different goods from numerous sources – like manufacturers and wholesalers – and then, in an almost immediate turnaround, send those same goods out to retailers and shoppers. A large box store that offers customer pick up may choose to fulfill their orders via a distribution center, for instance.
Distribution centers are usually more sophisticated than warehouses, carrying out their functions with automation that tracks and keeps control over the incoming and outgoing inventory. In addition to tracking the inventory, these software systems facilitate the fulfillment side of operations with speed and efficiency.
Distribution centers are best for:
- ecommerce businesses – because they need to process their inventory and fulfill orders quickly.
- Third-party logistics companies that want to fulfill orders with the least amount of outlay.
Bonded means that the warehouse operators have been granted legal authority to store imported goods before they’ve been inspected and had any customs duty owed levied on them. Usually owned and operated by a government agency – though they can be private companies – these warehouses provide convenient and appropriate storage for imported goods or goods waiting to be exported, which wouldn’t be the case if they had to be stored at the ports. Even more beneficial is the fact that any customs duty owed on the goods is only paid when the goods leave the bonded warehouse. Plus, any stored goods that are in transit – meaning they’ve been brought in from one country and are awaiting shipment to another – will be exempt from paying duties to the country the bonded warehouse is located in.
Bonded warehouses are best for:
- Importers that want a place to store their goods until those items enter the supply chain.
- Exporters who want to bypass inspections or duties in those countries that are merely temporary transit areas.
Smart = automation, and that means technology and software. An automated warehouse replaces manpower with robot-driven machines like forklifts, cranes, and self-driving carts, while sophisticated computer-based systems oversee operations like storing, picking, packing, shipping and tracking inventory as it moves through the supply chain.
Smart warehouses are best for:
- Larger ecommerce companies and manufacturers that need to move great quantities of items through their systems quickly, efficiently, and cost-effectively.
Essentially, these are 3PL companies that collect small shipments from numerous suppliers and vendors, combine (or consolidate) them into one large package, and then ship that single package off to a destination. The fact that the shipments from the different suppliers go to the same place as one package significantly reduces transportation costs.
Consolidated warehouses are best for:
- Startups and small companies that aren’t moving a lot of inventory.
- Small companies that want to reduce the amount they spend on storage as much as possible.
Here the storage facility is owned jointly by several different companies, each of which has a stake in the storage space. Often co-owned and used by companies that store similar types of inventory – like wineries or farmers – co-ops offer members mutual benefits like reduced storage costs. And if some of the space is rented out to a non-member company, the co-owners share in any profits made.
Cooperative warehouses are best for:
- Groups of companies that have to store the same type of product, especially if those products are food related.
- Companies that are in the same geographical area and are willing to pool resources and share costs.
Often referred to as cold storage, a facility like this is mainly designed to hold perishables and keep them fresh, though they can also be used to maintain the integrity of fine art and fur coats. The climate-control aspect can either be used in the whole warehouse or just a part of it. For instance, stand-alone freezers could be placed in a corner of a regular storage space for frozen food.
Climate-controlled warehouses are best for:
- Companies whose products need to be kept in cold storage or other special conditions.
- Companies that are prepared to cover the high cost of this type of storage.
Which warehouse is right for you?
To make this decision, you have to consider more than the type of product you handle, you also have to keep in mind the number of products you have and the amount you have to spend on their storage.
When you’ve made a choice, however, you should think about streamlining your fulfillment operations even more by bringing in a warehouse management system. Cin7 Core can help you with that. Our software will take care of all your warehouse needs, boost your productivity, reduce your costs, and speed up your fulfillment process.
Get a free 14-day trial by calling one of our experts today.