Different Types of Warehouses and How to Choose the one for your Business
Whether you are an eCommerce retailer, a brick-and-mortar seller, or even a manufacturer, where you store your stock matters a lot. Your warehouse setup is directly connected with how well you serve your customers and perform as a business, which is why the more organised your warehouse is, the easier it is for you to build a remarkable fulfilment experience that establishes a strong foundation for you in your industry.
However, warehousing is also one of the most challenging aspects of running a business – which means that your warehouse can go from being a high-functioning hub of productivity to an unorganised, chaotic facility in the span of just one mistake.
How do you make sure you avoid that?
Well, the first step is to be certain that the type of warehouse you are working with is right for your business!
To help you pick the right warehouse that aligns with your operations, we have compiled a list of 10 different types of warehouse and some tips to help you choose.
Keep reading to find out more.
What is a Warehouse?
To put it simply, a warehouse is a large building used to store your stock in the place where all your fulfilment processes take place. In a warehouse you will find all the storage racks, handling equipment, and other fulfilment resources and assets you need. Your warehouse is where most of the order processing takes place, including important processes like picking and packing.
As such, taking care of your warehouse means strengthening the foundation of your fulfilment experience, and it is so important to make sure that your efforts in this area are not going to waste.
Types of Warehouses
While there are many types of warehouses and fulfilment facilities, we zoom on in the ten most prominent ones below:
Public Warehouse
In the simplest terms, a public warehouse is owned by a public entity. It is made available on a rental basis to private companies, but it belongs essentially to a government entity. You can use these kinds of warehouses for both business and personal uses.
Who is it for?
Public warehouses are accessible to the general public, so simply anyone and everyone can use them. However, from a business perspective, they work best for businesses that don’t have any advanced warehousing needs, and only need a facility to store inventory for a relatively shorter period. In addition, seasonal businesses could also work with public warehouses.
Public warehouse: advantages
The biggest advantage of public warehouses is that they are accessible to everyone. In addition, they are also quite affordable, so businesses that are struggling with managing their budgets would benefit from public warehouses.
Private Warehouse
A private warehouse, as the name suggests, is a warehouse owned by a company. This form of warehousing is also known as proprietary warehousing, and it works by a business securing a building to turn it into a warehouse facility. The business is in charge of streamlining the facility, as well as the general upkeep of the vicinity.
Who is it for?
Private warehouses are the best fit for manufacturers, wholesalers, and distributors. This is primarily because the operations for these setups require you to have a certain level of control over your facility. It is also on the slightly pricier side (especially in comparison to public warehouses), so only businesses that can afford the higher prices are recommended to consider these types of warehouses.
Private warehouse: advantages
One of the best things about private warehouses is that they grant you increased control. This means that you can manage the pace of your operations, as well as work at a more exclusive location for the storage of your inventory. If security and autonomy are big concerns for you when it comes to your fulfilment experience, there is no better option for you than private/proprietary warehousing.
Cooperative Warehouse
Have you ever heard of co-working spaces? Cooperative warehouses are kind of like that, but for fulfilment, of course. These warehouses are likely to be owned by multiple businesses, and organisations can use them collaboratively. Usually, these businesses will have similar products and operations, so it is easier for them to share the space and use it productively.
Who is it for?
Businesses that want to save money on the warehousing end will greatly benefit from cooperative warehouses. They are commonly used by farmers and wineries, considering that it is easier for them to share the space and similarly store their products. So, we would recommend you consider this type of warehouse if you feel comfortable working closely with another business that shares the same inventory type as you.
Cooperative warehouse: advantages
Because these warehouses require you to combine your funds, cooperative warehousing is a great way of saving money and optimising your cash flow. Sharing a space with another business can be hard, but if you can get it right, there is no other drawback you have to be aware of.
Smart Warehouse
As the name suggests, smart warehousing is integrated and automated with AI tools and technology. Smart warehousing is increasingly becoming the go-to choice for a lot of businesses, as it is a lot more efficient, allowing you and your team to be a lot more productive. Smart warehouses involve AI carrying out major fulfilment tasks like packing and transporting goods, which takes a considerable burden away from your employees.
Who is it for?
Everyone! Yes – anyone and everyone can and should benefit from smart warehouses. However, they work best for bigger corporations, as without a smart warehouse these corporations can simply not function and keep up with consumer needs effectively.
Smart warehouse: advantages
Since everything is automated, your processes are much more likely to be accurate and mistake-free. Because you can cut back on these errors, you can also save money. Smart warehousing is also a great way to increase the safety of your operations, and reduce the burden on your workforce.
Consolidated Warehouse
The way consolidated warehouses work is rather interesting. The purpose of these is to collect the shipment from different suppliers and consolidate them in one facility (hence the name!). It then operates as a shipping area and allows businesses to streamline the transportation of their goods more efficiently.
Who is it for?
Consolidated warehouses work best for businesses that don’t have a lot of orders that need to be shipped. It would also be a great option for new companies and startups, that don’t have advanced needs, and are not looking to expand, but rather ship to only some areas.
Consolidated warehouse: advantages
The biggest advantage of these is that they are economically friendly, and also allow businesses to save a lot of time and effort. You will have to pay less for shipping and can work with whatever limited inventory you have. In addition, you don’t have to work with high inventory levels and can proceed with the little inventory you do have.
Bonded Warehouse
Bonded warehouses store imported goods. So, before customs duties and all other prices are paid for, goods can be stored in bonded warehouses. They are often an important part of the whole fulfilment process because they provide a safe, temporary storage space for products that are still being paid for. Considering that clearance can be a long, complicated procedure, it is great that governments offer bonded warehouses that can safely and securely store all your products.
Who is it for?
A bonded warehouse would work best if you regularly deal with imports and use it for both your short-term and long-term needs whenever you like.
Bonded warehouse: advantages
Thanks to bonded warehouses, you don’t have to indulge in the hassle of fast-forwarding the clearance process. They ensure that your products are safe and secure. These warehouses can store a large number of different products, and hence, can act as a crucial component of your business strategy.
Government Warehouse
A government warehouse is quite similar to a public warehouse. However, these warehouses are not owned by just any public/governmental entity. They are owned directly by the government. As such, although they function similarly to public warehouses, they are a lot safer and a much better option for a lot of businesses.
Who is it for?
Technically, anyone can consider using a government warehouse. However, the process of actually securing one is quite extensive and will require some effort from you in terms of paperwork and applications. Only if you are ready to deal with that should you consider a government warehouse.
Government warehouse: advantages
As these warehouse are very secure, you would particularly benefit if you take care of sensitive goods. Another bonus of this type of warehouse is that they are a lot more affordable and accessible than other options available.
Cold Storage Warehouse
This kind of warehouse stores temperature-sensitive products. As such, it can either present itself as part of a building or even an entire building – depending on the nature of the business. The main characteristic of cold storage warehouses is that they have a controlled environment since they have to accommodate particular conditions for the products being held.
Who is it for?
Needless to say, businesses that have to deal with temperature-sensitive goods will be able to make the most out of cold storage warehouses. So, if your inventory consists of mostly perishable items, it is not just ideal but also necessary for you to have a cold storage warehouse.
Cold storage warehouse: advantages
Cold storage warehouses provide a safe space for temperature-sensitive items and hence are the most advantageous in terms of ensuring that your items don’t spoil before their time. They are also a great fit for rare products, plants, and medicines. For businesses that are looking to ensure the well-being of these kinds of products, cold storage warehouses are particularly beneficial.
On-Demand Warehouse
Companies that don’t need the warehousing space they are already in possession of often rent out the extra space as an on-demand storage/warehouse. This is a particularly popular form of warehousing and is increasingly becoming a go-to choice for many businesses, thanks to the increase in online commerce.
Who is it for?
Any business that wants to work with temporary extra storage space can turn to on-demand warehousing. For example, say that you deal with a sudden spike in your inventory and need to fix it ASAP; you can get on-demand storage space and tackle the issue accordingly. Businesses with seasonal needs would benefit from this the most.
On-demand warehouse: advantages
On-demand warehouses are cost-effective and convenient, especially for seasonal needs. They also encourage mutual collaboration and enable multiple businesses to work together and save money. If your business is prone to fluctuations and sudden spikes, on-demand warehouses and storage spaces help you improve it.
Distribution Centres
Who hasn’t heard of distribution centres? They work by taking large amounts of inventory and connecting it with relevant vendors in a much speedier and more efficient manner. Since distribution centres are larger than a normal warehouse, they can accommodate more advanced processes and allow more organised transportation of goods across the supply chain.
Who is it for?
Bigger enterprises, wholesalers, and manufacturers would be the perfect fit for distribution centres. Since they are focused on enhancing the whole fulfilment experience and not just facilitating inventory storage, they are good for businesses that want to improve their processes on a much bigger level.
Distribution centres: advantages
They are a lot more efficient than normal warehouses. They are also generally more affordable for bigger enterprises and wholesalers. Distribution centres allow businesses to streamline multiple facets of their business, not just inventory. Ultimately, this means that with distribution centres, businesses can take a proper holistic approach while also working towards improving the overall efficiency of their business.
How to Pick the Right Warehouse for your Business?
Now that you know everything about the ten most common types of warehouses, you need to turn your attention toward making the right choice for your operations. Although the discussion above will suffice in terms of guiding you in the right direction while selecting the warehouse for your business, here are a few other things you should look out for:
Make sure that the warehouse has all the right qualities
Quite straightforward, right? But many businesses neglect this part and end up with a warehouse that simply is not built to align with their operations. To avoid this from happening, check if your warehouse has the right qualities or not. The “right quality” depends on the needs of your business, so just make sure you understand your operations fully before you decide on a type of warehouse.
Always choose the secure option
There is nothing more important than the safety of you and your products. As a general rule of thumb, always go for a facility that supports your security needs. Whether it means a exclusive location or more of a shared space, just pick the option that suits your needs and is safe for your products, and you will be good to go.
Ensure that you have control over certain elements of the space
No matter what type of warehouse you pick, there are certain elements that you need to be in control of. This is because the needs of every business fluctuate sooner or later, and you should have the leverage needed to make necessary adjustments to deal with them better. So, even if it is more of a shared setting, you still need to ensure that you have autonomy over your processes and are free to make the choices that work best for your operations.
The warehouse should expedite your processes; not slow you down
It is immensely important for you to ensure that the warehouse is fit to make you more efficient and productive. For example, you may be attracted to picking a larger space than necessary. However, with limited staff, this space would only slow you down. It’s little things like this that you need to look out for and make sure that you are not rushing into something that you can ultimately not sustain. Therefore, always pick the option that you can see helping you not only in the short-term but also on a long-term basis.
Think smart
We mentioned that smart warehousing is for everyone, and we truly mean it. Don’t think of it as a type of warehouse, but a method that can make ANY warehouse more efficient and more productive. For this reason, we would recommend you look for a warehouse space that enables you to introduce AI tools, technology, and assets to it. For example, a warehouse management system would truly transform the way any warehouse operates, so you need to make sure that the space you select allows you to use it to the best of your ability.
Key Takeaway:
There are many different types of warehouses, and it can often be hard to decide which one is the best for you and your business. But hopefully, our discussion on the different types of warehouses will help you make the right choice for your business!
Remember: if you want your business to evolve, you will have to put in the effort and make your warehouse better. Selecting the right type helps, but it is also important to think smart and integrate your premises with top-notch tools and technology – such as Canary7’s advanced and specialised warehousing management solutions.
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