Different Types of Warehouses: What's Best for Distribution

Are you into a manufacturing business or deal in import, export, or transporting goods? Then warehousing is definitely a critical aspect of your business. Contrary to what some people think, warehousing is not an unnecessary expense to your business but a potential source of competitive advantage. If used properly, a warehouse can help an organisation save money, boost its productivity and enhance its image. The journey of a product starts when a customer orders it and ends when the customer receives it safely and on time. Warehousing is the process of storing and managing your products inventory before distributing it to the customer.

Importance of warehouses for any business 

For a business to succeed in the long run, it needs to ensure a regular supply of its products at all times. For most products, the demand keeps fluctuating around the year. However, production cannot be scaled up or down so easily. So, the solution to manage this variation in output and demand is safe storage.

That's where a warehouse comes into the picture. For a long time, warehouses have been utilised for various storage needs. In the current business scenario, warehouses are not restricted to storing goods. They play a vital role in logistics and supply chain management. Specialised logistics and warehousing companies offer professional warehousing and end-to-end logistics services as per customers’ requirements. These companies use the best processes and the latest technologies to provide their customers with the most cost-efficient and seamless services. 

Benefits of Warehouses: 

  • Central Storage Location: A warehouse located at a central location helps a company save time and cost in delivering a product. It is crucial to have a warehouse at a site that is easily accessible, which helps provide the product to the customers quickly within a short interval of time. Such a location will make the most sense for your business and product.
  • Stabilises Product Prices: One of the most significant benefits the warehouses provide is to even out or at least minimise the irregularities in the product supply. This has a direct impact on the price of the product. Warehouses ensure a regular supply of the product and thus stabilise its price in the market. A warehouse functions by stocking goods when there is excess supply and releasing them when there is a demand in the market.
  • Superior Customer Service: People are ready to pay more for faster delivery. Delivery time is considered when choosing a shipping carrier for the buyers.
  • More Efficient Packing and Processing: Modern logistics operations have become highly specialised with their own software and tools. One can hire experts to work in the warehouse and benefit from their knowledge and experience managing a warehouse. 

In a nutshell, warehousing is a critical process to store your products safely and deliver them to customers quickly. It helps a company optimise their distribution cost, improve labour productivity, and reduce errors. All in all, warehousing helps companies streamline their logistics process and deliver high customer satisfaction. 

Warehousing Processes

Over the last few decades, warehousing has evolved a lot. It has grown in relevance and scope from a simple activity and has now entirely transformed into science with mathematical and computer models.

The introduction of the Warehouse Management System (WMS) has made the entire process automated. The software assists the employees in creating efficient warehouse management processes for tracking and tracing products all along the storage and distribution process.

Each warehouse has its operations or steps that depend on the client's product and business nature. Some basic Warehouse Management Processes (WMP) usually followed are given below. 

  1. Receiving: This is the first stage, where the product enters the warehouse. Receiving is the first step in warehousing. It involves several activities. At this stage, the most critical thing is to confirm if the warehouse has obtained the right product, in the right quantity, in the right condition, and at the right time. Any discrepancy here needs to be communicated to the sender. An error or disruption at this stage can have a significant impact throughout the entire operation.  
  2. Put-away:  The process of moving the goods from the receiving area to the exact location where the goods are to be stored. Put-away is the process that involves calculating the resource and space requirements for each item. Then products received are scanned to confirm the identity of the product. If there is no barcode, a manual entry is made for this purpose. Once the scanning is over, the goods are sent to the designated storage location. 
  3. Storage: This is the third step of the warehousing process and one of the most critical steps. This is because this stage involves a longer time. After all, the product is stored in the warehouse for a considerable time. This process involves placing the goods into the most appropriate storage space. When done properly, the storage process optimises the available space in your warehouse, reduces time to locate it for delivery, and increases labour efficiency.
  4. Picking: A process to collect the goods according to a customer's order before shipping them. This is the costliest part of the entire process and may involve anything between 50-60% of the total cost of warehousing. This is the area where it is most critical to streamline the process as it directly impacts the efficiency and cost of your warehousing operations. 
  5. Packing: This process involves consolidating the items picked for delivery and preparing them for shipping to the customer. Depending on the product category and mode of transportation, it is the topmost priority to ensure that the product is not damaged in transit.
  6. Shipping: This is the final process of warehousing. This involves dispatching your order to the respective customers. Shipping is considered successful and complete only when the right product is sorted, packed, and shipped to the right customer through the proper mode of transportation. 

Types of Warehouses: 

  • Private Warehouse: A storehouse that is held explicitly by distributors, wholesalers, or manufacturers for their distribution purpose. Many retail and online marketplaces operate privately-owned warehouses. These warehouses are not open to the general public. 
  • Public Warehouse: Public warehouses are owned by the government and semi-government bodies. These warehouses are available for use to private sector companies on payment of a certain amount as rent. The public warehouses can be used for short or long term storage. This is a good warehousing option for start-ups.
  • Smart Warehouses: Technology and Automation is touching all aspects of the business. A smart warehouse automates the entire warehousing process by extensively using Artificial Intelligence. Logistics companies like Varuna Group manage these smart warehouses, where the warehouse uses automation at each step. The companies use the latest technologies like bots and drones to perform tasks like packing, weighing, transporting, and storing. Smart warehouses have very minimal human supervision. Most e-Commerce giants use smart warehouses to ensure a seamless warehousing process. 
  • Consolidated Warehouse: This type of warehousing is most suitable for companies having multiple production units within a given geographical area, each producing different components yet related to each other. The central warehouse receives smaller shipments from various production units and then consolidate them into larger, more economical truckloads to distributors or regional warehouses.
  • Bonded Warehouse: These warehouses may be owned by the government or private agencies. However, they work under the control of customs authorities. These warehouses are used as a secure place to store imported goods. The warehouse keeper signs a 'bond' with the government that it will not release the goods without the consent of customs authorities. This ensures that the importer pays the import duty on time. Once the import duty is paid, the customs authorities approve the release of the goods, and the importer is allowed to take the goods.
  • Distribution Warehouse: This type of warehouse is specially designed to serve goods and is located towards the end of the supply chain. These warehouses mainly work as a bridge between a supplier and its customers. They are located strategically to deliver the goods to customers quickly.

Which type of warehouse is best?

Each type of warehouse has its importance and a purpose of its own. Any good logistics company, like Varuna Group, offers several kinds of warehousing services. As a business owner, you need to see your product category and business requirement and then choose what suits your needs the best whilst keeping your short and long-term business goals in mind. 


Q. 1: What are the different types of warehouses? 

Ans: The different types of warehouses are - Private warehouse, Public warehouse, Smart warehouse, Consolidated warehouse, Bonded warehouse, and Distribution warehouse. 

Q. 2: What are the facilities offered at warehouses in India?

Ans: Warehouse services offer real-time data, reduced distribution costs, logistics costs, and streamlined procurement. 

Q. 3: Which type of warehouse is suitable for E-commerce?

Ans: 3PL warehouses are most suitable for E-commerce as the outsourced agency takes the entire responsibility of the logistics process. Logistics companies like Varuna Group offer e-commerce companies a cost-effective warehousing solution customised to the customers' needs.

Q. 4: What to look for in e-commerce Warehouse Management?

Ans: For any E-commerce business, you need management of supply and demand, order management efficiency, and flexible service that can pick and deliver your product safely at the customer's end. 

Q. 5: What is a 3PL warehouse?

Ans: 3PL (or Third-Party Logistics) refers to supply chain management, where an organisation uses the knowledge and experience of a third party, like Varuna Group, to outsource elements of its distribution, warehousing, and fulfilment services.