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