On-site warehouse space

On-site warehouses can be located at a central location or dispersed throughout the firm’s manufacturing facilities. On the other hand, off-site warehouses are satellite facilities located close to potential market areas, storing excess inventory from the on-site warehouse and to act as a distribution center for finished goods.

Private warehouse is also known as proprietary warehousing. It operates as a division within the firm and requires a large amount of investment in land, building, equipment and skilled labor (also known as set-up costs). The warehouse facility itself can be privately owned or rented.


Skill express private warehouse

A 3PL is a firm that provides outsourced or “third party” logistics services to one or more logistics functions of a company.Examples of 3PLs are DHL and Kan Ban Logistics.

A public warehouse is a type of warehousing owned and operated by a 3^rd Party Logistics service provider (3PL). Usually firms rent public warehouse space on a short-term basis. Unlike private warehousing, public warehouses do not require any set-up cost.

A contract warehouse is an altered form of a public warehouse. It is also owned and operated by a 3PL. Firms usually use contract warehousing on a long term basis. The contract can be either for an entire or a part of a building. The main purpose is to reduce cost. Businesses that seek to minimize risk or liability also benefit from contract warehousing as the risk is shared between the owner of the goods and the warehouse company.

Bewley contract warehouses.

Some of the other functions that a 3PL provide besides public and contract warehousing are order fulfillment, distribution and customs and freight consolidation. The 3PL manages and executes the particular logistics functions using its own assets and resources, on behalf of the client company. In this way, the client company also benefits as it has more resources available to concentrate on its core competences.

Here's a video on featuring 3PL service provider - KanBan Logistics.

Firms usually adopt the public warehousing approach when they are unable to determine the costs needed to setup and maintain the warehouse such as inventory holding costs or do not wish to make any commitment in owning and operating a warehouse.

For private warehousing, it is usually adopted when unique handling services are needed for products such as gasoline or when the firm is stable enough to provide for their own warehousing needs on a long-term basis i.e. able to make long term investments for their warehouses. Established retail giants such as wal-mart make use of private warehousing as they have to handle high volumes of merchandise on a regular basis. By combining the warehousing function with purchasing and distribution to the respective retail outlets, they gain economies of scale.

Wal-mart warehouse in Las Vegas.

Reference: Youtube - kanban Logistics
Bewley Properties
Skills Express and Furqan for private warehouse photos
Public/Private warehouse
Seaboard Warehouse Terminals
Wikipedia - 3PL