Private Warehousing

Private WarehousingThe private warehouse is a storage facility that is mostly owned by big companies or single manufacturing units. It is also known as proprietary warehousing and can be operated as a separate division within a company.

The private warehousing can be done on on-site and off-site basis and serves as fixed corporate investment in land, building and equipment.

On-site warehouse: The on-site warehouse can either be at some centralized location or can be separately situated at different manufacturing facilities.

Off-site warehouse: The off-site warehouses are the storage facilities that are located closely to the marketing areas and are used for storing on-site inventory. These warehouses also serve as distribution center for finished goods.

Advantages:

  • Degree of control
  • Less costly in the long term
  • Better use of human resources
  • Tax benefits
  • Intangible benefits

Disadvantages:

  • Its been costly for its fixed size and cost
  • High opportunity cost (high risk)
  • Low Rate of return
  • High start-up cost