Warehousing is an important function of physical distribution, particularly when a manufacturer produces consumer goods. A commercial building for the storage of goods is known as a warehouse.

Some inventory is kept at or near the plant, and the rest is in warehouses in other locations. A company can own private warehouses and also rent space in public warehouses. Strong warehouses store goods for moderate-to-longer time periods. Distribution warehouses receive goods from various company plants and suppliers, and move them out as soon as possible. Some warehouses provide facilities like cold storage. There are specialized warehouses for agricultural products.

The older, multistoried warehouses have slow elevators and inefficient material-handling procedures. These older systems are receiving competition from newer, single-story automated warehouses with advanced material-handling and warehouse-management systems under the control of a central computer. The computer reads store orders and directs lift trucks and electric hoists to gather goods according to bar codes, move them to loading docks and issue invoices. These warehouses have reduced worker injuries, labor costs, pilferage, and breakage, and improved inventory control.

The optimal location of a warehouse or warehouses is decided considering minimal transportation costs. Customer services, levels of inventories and company warehouse versus public warehouse are some of the issues to be decided by logistics management. In some large companies, warehouses are operated by the sales department, or arrangements are made with public warehouses.

Suitable locations and an adequate number of warehouses maintained by an organization can give the customer better service and can also result in a reduction in transportation costs if the goods are moved by wagonloads, truckloads, or barge loads into the warehouses.

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