Business

Warehouse Ownership Classification in the Interline Industry

Faced with fierce competition in the global market, each manufacturer is doing its best to develop its own competitive advantage. This is especially true in the interline industry. One of the aspects for an interline provider to achieve a competitive advantage is to reduce costs and increase efficiency. While reducing the cost of storage is one medium that an interline provider should focus on. Before doing strategic planning to lower your storage cost, you need an interline provider to understand the basic concept of warehouse property classification.

Warehouses in manufacturing industries are generally classified by property. Under this idea, warehouses can be classified into private warehouses, public warehouses, and contract warehouses.

1. Private warehouse

A private warehouse, as a type of warehouse-owned classification, is operated by the companies or organizations that own the products stored in the facility. These companies or organizations can be factories, trading companies, or wholesalers. The warehouse building can be owned or leased. The critical point for a business deciding whether to own or rent the facility is financial concern. Sometimes it is not possible to find a suitable warehouse to lease. Take an interline provider, for example; Storage shelves or other physical nature in a leased building may not be suitable for the storage of interfacing products such as woven interfacing, non-woven interfacing, and fusible interfacing. In this circumstance, it is necessary to carry out the design and layout for construction. On the other hand, in a particular connection for logistical purposes, a company may find it difficult to find a warehouse for the property.

The main benefits of a private warehouse are flexibility, control, cost, and some intangible attributes. A private warehouse is more flexible than a public one, as the operational policies and the process can be adjusted to meet the special needs of a customer or the product itself. In addition, a suitable course of action can be taken to meet specific requirements for logistical purposes.

Private warehouses offer stable control since the firm has the exclusive authority in managing the warehouse to optimize activities. For example, control of warehouse operations for an interfacing product such as woven interfacing, nonwoven interfacing, and fusible interfacing can be integrated with the logistics operations of an interfacing supplier.

Generally, a private warehouse is considered less expensive. One reason is that a private warehouse is built within a supplier’s manufacturing base; therefore, the fixed and variable components may be less than those of a public warehouse. Also, a private warehouse is not profitable for the owner of the facility.

A private warehouse can also have intangible benefits. For example, a store with the name of an interfacing supplier for woven interfacing, nonwoven interfacing, and fusible interfacing can provide marketing advantages. Customers can have the perception of stability and reliability towards the provider.

2. Public warehouse

Unlike a private warehouse, a public warehouse as another type of warehouse-owned classification is independently operated by a company to offer a wide range of storage-related rental services. Such warehouses are widely used in logistics systems to reduce supply chain costs. A public warehouse can be contracted in the short or long term, depending on the policies of the facility and the needs of the clients.

From a financial point of view, a lower storage cost can be achieved by hiring a public warehouse than by owning a private warehouse. Shared resources and economic scale in a public facility can result in lower operating cost. Another benefit of public storage is that customers as the supplier of interlining for woven interlining, non-woven interlining and fusible interlining do not need to spend a large investment in the facilities. Additionally, a public warehouse allows users to easily change the number and size of warehouses to meet special demands.

Users of the same public warehouse can share economies of scale by taking advantage of the combined requirements of users. Said leverage varies between fixed cost and operating cost. The cost of transportation can also be taken advantage of in a public warehouse. For example, a public facility may organize the combined delivery consolidation to the customer, to deliver the woven interfacing products from the first interfacing supplier with the nonwoven interfacing products from the second interfacing supplier to the same destinations.

Due to its flexibility, scalability, services, and variable cost, public warehouses are popular with many businesses. In general, a public warehouse as a type of warehouse property classification can design and perform special services to meet the operational requirements of customers.

3. Contract warehouse

A contract warehouse, as a third type of warehouse property classification, has the attributes of public and private warehouses. A contract warehouse can also be understood as a custom extension of a public warehouse, which is a long-term business agreement to provide specific and personalized logistics services to customers. A contract warehouse is also thought of as a form of business process outsourcing from a logistics perspective. In this relationship, the customer and the service provider share risks related to storage operations.

In general, many companies tend to use a combination of private, public and contract warehouses. Basic knowledge of warehouse ownership classification will serve as a management guide on how to develop a warehouse implementation strategy. Such warehouse planning focuses on two aspects, namely 1) the number of warehouses required and 2) the warehouse ownership used in specific markets. Focusing on these two aspects will create a segmentation of the warehouse for specific markets, which can provide more personalized and customer-focused logistics capabilities.

Leave a Reply

Your email address will not be published. Required fields are marked *