Private Versus Public Warehouse Essay

Nowadays, manufacturing and services firms face growing challenges to increase profit margins amidst increasingly fiercer competition. Under such circumstances, industry analysts and supply chain experts suggest manufacturers and service providers to promote more effective supply and demand planning, management, and execution as the means to unlocking significant gains in margins. According to Search CIO (2007), SCM refers to management of information, materials, and finances along a chain of process from suppliers to manufacturers and then from manufacturers to customers. The interests in the discussion of supply chain management occur since it relates to costs reduction in all aspects of business process especially regarding the inventory reduction that suggests manufacturer produce goods when needed. In this situation, the selection of type of warehouses play significant role since it determines the SCM strategy for a company. In general, there are two types of warehouses: private and public warehouses. 2. Private Warehouse By definition, private warehouse is type of warehouse that directly maintained and operated by the owner of products or goods that are stored in it. Meanwhile, the warehouse facility itself could be happened to be privately owned or leased (Seaboard Warehouse Terminals, 2004) 3. Public Warehouse The other type of warehouses is public warehouse. Unlike private warehousing, public warehousing provides greater efficiency for a company since one warehouse is designed to design multiple logistics. Figure 1 shows typical design for warehousing needs in which the selection of public and private warehousing depends on the needs. Figure 1 Warehouses Needs Classifications 4. Public Warehouse versus Private Warehouse: Consideration Like outsourcing decision, the selection of type of warehousing that is suitable for a company. And according to comparison based on several factors, the public warehousing is considered beneficial than private warehouses as following: 4. 1. Costs Reduction †¢ Public warehousing does not require a company to have dedicated human resources/personal to operate the warehouses facility †¢ The handling and storage fee is predictable †¢ the warehouse costs can be translated into the storage costs to volume that would help marketing department to include this costs in the pricing scheme of the products