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What Is Warehouse?: Warehouse Concepts

By
Bradley Johnson
Table of Contents

Making sales for your business is only half the battle; efficient warehouse management is the other half. It’s crucial to have a strong warehousing strategy to ensure customer satisfaction, including the use of warehouse inventory management software.

Four out of five survey respondents share that shipping speed and cost are influential factors on purchase decisions. Both factors are influenced by the warehousing model your business uses. By taking advantage of the right warehousing solution, your business will thrive. 

Keep reading to discover warehousing fundamentals and different options at your disposal. 

warehouse management ebook

What Is Warehouse?

A warehouse is a building that stores products for stocking, packing, and shipping preparation. Warehouses are central locations that manage both inbound and outbound products. Maintaining a warehouse is crucial for any business that sells physical goods or receives products from a wholesale marketplace. As a business’s sales grow, the need for physical space to maintain and package items grows, too. 

Depending on a company’s needs or preferences, multiple service providers may handle separate warehouse-related tasks. There are different types of warehouses for different businesses, but every warehouse provides secure storage for products.

What Is A Bonded Warehouse?

A bonded warehouse stores products before they’re released for customer delivery, and before duty is paid by the product importer.

Bonded warehouses are useful for a couple reasons. One, it’s a simple way to expand your warehousing and reach new customers more effectively. Two, you’re provided a bond for your products, which protects your profits against local taxes.  Three, bonded warehouses offer temperature-controlled rooms and storage options, ensuring products don’t get spoiled. Four, the bonded warehouse you contract with may offer their own logistics, making it easier to manage shipping and delivery. 

Bonded warehouses in the US are similar to those in other countries. They are spaces to store dutiable imported goods that have not been sold yet for up to five years. A bonded warehouse in the US may be owned privately, publicly, or by the government. Many US-based bonded warehouses are located in popular harbor areas, like Newark, Los Angeles, and Miami.

What Is 3PL Warehouse?

A third-party logistics warehouse, or 3PL warehouse, is a type of 3PL companies that provide warehousing services for other businesses. A 3PL warehouse stores a business’s products, oversees operations, and provides the business with real-time access to those operations. 

If your business is rapidly expanding and you don’t have the space to store products, a 3PL warehouse may be right for you. This allows you to control crucial aspects of your business like marketing, sales, and product rollouts without the hassle of warehouse management. 

What Is Fulfillment Warehouse?

A fulfillment warehouse handles only the storage, packing, and shipping of goods from the warehouse to customers. In many cases, businesses that contract with fulfillment warehouses still need to drop off inventory at the warehouse. 

Fulfillment warehouses offer great flexibility for eCommerce businesses that are growing or experiencing unpredictable order volume. This type of warehouse is also increasingly accessible, making it simple to get started. More business owners are also turning to warehouse management systems to simplify this side of their business.

What Is Industrial Warehouse?

An industrial warehouse is typically one company’s centralized location for product development, fabrication, assembly, storage, shipping, and administrative work. A given business may not perform all of these tasks in one building, but the warehouse may be connected to an office complex. 

While warehouses and industrial spaces are often used interchangeably, they don’t implicitly offer the same features and benefits. Warehouses are used for the intake, storage, and shipping out of products, whereas industrial sites often span more activities. If you use an industrial warehouse, be extra sure your warehouse management process flow is in place before goods are ordered.

Important Warehouse Concepts to Know

Now that we’ve looked at four common warehouse types, there are important warehouse concepts to know, too. Selecting the right warehouse company involves knowing your preferences as well as the type of warehouse organization your business needs. Read further to acquaint yourself with these crucial concepts. 

What Is Picking at a Warehouse?

Picking is the process of identifying the correct product for an order, obtaining it from the shelf, and bringing it to the packing area. No matter which type of warehouse solution you use, one or more people are responsible for picking (and often packing). 

Warehouse pickers are responsible for being highly accurate (for more information, see what is a warehouse associate). Picking the right order each time also makes inventory updating and changes easier. 

What Is Value Added Services in Warehouse?

Value added services are any task that goes above and beyond normal warehouse activities. If your business sells product bundles, requires additional labeling on products, or needs repackaging, these are all value-added services. 

Warehousing service providers engage in value-added services to remain competitive and offer superior results for their clients. If you already appreciate working with your warehousing provider, you can save time and money by asking them about value-added services. 

If you run a warehouse that offers these services, it may affect the type of compensation your employees expect. Be sure to research the average warehouse manager salary before you offer clients or customers additional services.

What Is Warehouse Receipt?

Warehouse receipts guarantee in writing that a warehouse does or will store a particular quantity and quality of products. A warehouse receipt is different from everyday life receipts--for example, a receipt provided to you after a meal. 

This type of document is useful for three reasons: 

  • It’s written proof that quality standards have been met for applicable products.
  • It allows business owners to work off of a future trend line for their growth.
  • It guarantees that an agreed-upon quantity and quality of product(s) will be kept in a warehouse.

Warehouse receipts are regularly used in situations where a seller wants to buy from a producer, but the producer hasn’t made the product yet. The producer and seller can draw up a receipt that guarantees a certain quantity and price by a given date.

There are also two types of warehouse receipts; negotiable and non-negotiable. A negotiable warehouse receipt indicates that the specified goods are deliverable to the person or company bearing the document. The bearer can use the receipt as collateral, in the event of default on a loan. 

A non-negotiable warehouse receipt indicates to whom the goods will be delivered and can’t be changed. It’s important to assess your own business’s needs and select the right type of warehouse receipt accordingly. 

What Is Cherry Picking in Warehouse?

A cherry picker is a motorized, elevating work platform for large warehouses. For massive warehouses that contract with multiple clients, vertical storage efficiency is necessary. Using a cherry picker to retrieve high-shelved products is both safer and faster than using a ladder. Having the right warehouse labels in place is crucial to prevent picking the wrong product.

Cherry pickers are also useful for conducting warehouse repairs, replenishing stock, and adjusting shelving units. If you need fresh solutions to old problems in your warehouse, consider investing in one of these time-saving machines. A cherry picker may be handled by a warehouse manager (for more info, see warehouse manager job description).

Great Things Are In Store

Warehouses are integral to the success of all types of eCommerce businesses. Picking a service provider that complements your products’s needs makes a big difference for your customers. Using the information detailed above to develop your own warehouse or select the right service provider puts you on the path to success.  You may also want to list your business or seek out suppliers through a reputable wholesale directory to increase sales and limit risk.

Still have questions about the process? Check out our warehouse management guide.