Often used interchangeably, warehousing and storage are key components of any business – retail or e-commerce. While it may seem like both these terms refer to the same concept, in reality, there are a few significant differences between warehousing logistics and storage, which must be known in order to fully realize the benefits of the two.
In this article, we dive into the difference between storage and warehouse and the key features of both.
What Are Warehousing and Storage?
To begin with, let us take a look at the most straightforward definitions of the two concepts.
Warehousing refers to the practice of large-scale storing of goods in a designated location, known as a warehouse, till they are distributed or sold.
Some of the elements of warehousing are inventory management software and tools, equipment to move goods around, shelves and racks, trained personnel to manage and sort goods, and so on.
In several cases, businesses outsource the job of warehousing to a third-party logistics management company.
Storage usually refers to small-scale storing of goods in storage units. Unlike warehousing, storage can be done in places with much smaller capacities, like a refrigerator or a small room.
Differences Between Warehousing and Storage
There are a number of differences between storage and warehousing based on a few critical factors. Once these differences are understood, business owners will find it easy to evaluate whether they need a warehouse or storage unit for their goods.
|Capacity||In terms of capacity, warehouses are built to store large quantities of goods. Furthermore, warehouses can store different kinds of goods and even raw materials.||Storage units are significantly smaller than warehouses and are used for smaller items. Additionally, specific storage units are made for specific types of products.|
|Duration||Warehousing is a long-term solution wherein seasonal goods can be stored till they are in demand again.||In the case of storage units, the goods are kept for smaller intervals.|
|Cost||Warehousing is much costlier, as this is a long-term solution and includes several different components like management software, employees, transportation, etc.||Storage does not necessarily need as many resources as warehousing; hence, it can be much cheaper.|
|Services||The services included with warehousing are picking, sorting, packing, and even shipping. Hence, warehousing plays an important role in order fulfillment.||Storage does not offer any other service besides providing a space to keep goods intact and safe.|
|Security||Since, warehouses are big spaces, usually buildings or big rooms, these have much higher security measures.||Storage might have security, but in several cases, it is negligible.|
|Location and Accessibility||Since transporting is a part of warehousing, warehouses are usually located near hubs where it can be easy to ship goods.||On the other hand, storage can be done anywhere. In several cases, storage units actually form a part of warehouses.|
Types of Warehousing and Storage
Now that you are aware of the difference between warehouse and storage let us talk about the different types of warehousing and storage. Knowing about the different types of warehouse and storage facilities can help businesses decide on which option fits their needs and requirements the best.
Four Main Types of Warehousing
Warehousing is an extensive process that varies from business to business. Here are four of the most common types of warehousing used today.
- Bonded Warehousing
- Public Warehousing
- ̌Private Warehousing
- Refrigerated Warehousing
- Bonded Warehousing
Bonded warehouses are locations where goods that are imported into a country are stored and processed. The main feature of this method of warehousing is that goods here can be stored without the payment of duty. The duty becomes payable once the goods reach their final destination. Bonded warehouses can be owned by the government or privately.
- Public Warehousing
Public warehousing is open to the general public and is usually owned by any third-party logistics company. In this system of warehousing, warehouses can be rented out for short-term or long-term, based on the need of the business. This kind of warehousing is particularly useful during seasonal surges or temporary warehousing requirements.
- Private Warehousing
Unlike public warehousing, in private warehousing, no third party is involved, and a warehouse is owned and used by the company itself. In this system, businesses get more flexibility to arrange the warehouses according to their own needs, which also helps in improving efficiency and saving costs.
- Refrigerated Warehousing
Like the name suggests refrigerated warehousing involves maintaining the temperature of warehouses at a certain level to maintain the integrity of goods. This type of warehousing is most common in the pharmaceutical, food, and cosmetic industries, among many others.
Three Main Types of Storage
Given that we’ve already discussed the many types of warehousing, it is also imperative to understand the various types of storage to understand why it is different from Warehousing. Given below are the types of storage in better detail.
- Vehicle Storage
A mini-storage facility is a small unit that can be used and accessed by a renter 24 hours a day. This type of storage is ideal for businesses that want to store a small amount of inventory. The main benefit of mini-storage is that it helps in saving money since businesses get to use smaller spaces to fulfill their requirements.
- Vehicle Storage
Vehicle storage is specifically used to store vehicles such as cars, trucks, boats, or motorcycles. This type of storage facility generally comes with enhanced security measures, gated access, and temperature control. The different types of vehicle storage facilities available are covered parking spaces, uncovered parking spaces, personal enclosed units, and shared indoor units.
- Self Storage
Self-storage is a broad term that refers to any kind of storage facility rented out to businesses for storing their goods. Usually, the rent is taken on a monthly basis, and in exchange, certain benefits like security measures, adequate storage space, and transport facilities are provided. Self-storage can be used on both short-term and long-term basis.
What Are The Benefits of Warehousing And Storage?
While there is a difference between storage and warehousing, both have similar benefits that highlight their importance in both e-commerce and brick-and-mortar businesses. In this section, let us look into how storage and warehousing help businesses run more efficiently.
- More flexibility: With the availability of different types of warehousing and storage facilities, businesses can select the exact kind of warehouse or storage unit they want for their goods. This enables businesses to operate more flexibly and allows better management of products and raw materials.
- Improved security: While warehousing and storage provide varying degrees of security, nonetheless, goods are far less likely to be stolen or damaged in both cases. Hence, both options are good for improving overall security.
- Better organization: In both warehousing and storage facilities, companies get the benefits of sorting their products according to their types, manufacturing date, batch number, final destination, and so on. Hence, businesses can become more organized by employing the right form of storage and warehousing management.
- Effective cost management: With the combination of all the above points, businesses can have more effective cost management since their money won’t be wasted on unnecessary expenditures or poor resource management.
What Are The Disadvantages Of Warehousing And Storage?
Both warehousing and storage have their common disadvantages as well. Knowing these disadvantages can help businesses plan their usage of these facilities more accurately.
- Limited accessibility: This is a major disadvantage in case a business is using third-party storage or warehousing facilities. That is because the business may not be able to access goods at their convenience at all times since they would have to follow the terms and conditions of the third party involved.
- Higher costs: It is no secret that warehousing and storage can come with huge price tags attached. At times, there may be no alternatives; hence, companies would have no other option but to pay a high price to use these facilities. Furthermore, companies might also have to rent additional storage units or warehouses in case of limited space, which further adds to the costs.
- Additional packing and transporting: In the case of third-party warehousing and storage, businesses will have to undergo an additional step of packing and transporting their goods to the respective location. This can be time-consuming and delay the supply chain workflow.
In conclusion, there are critical differences that exist between warehousing and storage. For instance, while the former is a long-term measure, the latter is a short-term solution. However, both these facilities have different types and come with similar advantages and disadvantages. Therefore, knowing all this information can help businesses make the right decision about whether they need a storage unit or a warehousing facility.
Moreover, if you require any assistance with fulfilling logistics, especially storage or warehousing logistics, consider reaching out to a 3PL company like Locad. And watch as your business soars to newer heights with the added assistance!