Advantages and Drawbacks of Warehousing

Advantages of Warehousing

·           It safeguards the stock of the merchants who do not have storing place.

·           Warehouses reduce distribution cost of the traders by storing the goods in bulk and allow the trader to take the goods in small lots to his shop.

·           It helps in selection of channel of distribution. The producer will prefer whether to appoint a wholesaler or retailer.

·           It assists in maintaining the continuous sales and avoids the possibilities of “out of stock” position.

·           It creates employment opportunities for both skilled and unskilled workers, to improve their standard of living.

Drawbacks of Warehousing

Warehousing is not effective because of the following reasons:

·           There are no adequate transport facilities between the place of production and warehouses.

·           Lack of sufficient storage facilities for different commodities such as perishable and non-perishable commodities.

·           Complicated formalities are to be fulfilled at the warehouses. The illiterate and innocent farmers are not able to cope with these procedures.

·           Complicated process of Barcode technology can reduce the storing of goods by some producers.

·           Unavoidable delay for obtaining financial assistance may cause loss to the owner of goods.