A warehouse is a commercial building for storage, sorting, packaging, staging or finishing goods (Wikipedia). You add a warehouse in a logistical system if it reduces systemwide logistics costs or adds speed such that the investment in the warehouse is economically justified.

  • Consolidation Warehousing - used to reduce transportation cost by using the warehouse to group shipments.
  • Break Bulk Warehousing - receives large shipments and arranges for delivery to multiple destinations gaining economy of scale for the large consolidated shipment.
  • Cross-docking - unloading materials from an incoming shipment and loading these materials directly into outbound trucks with little or no storage in between (Wikipedia 2011). Usually done with large homogeneous shipments broken down into heterogeneous shipments to various geographic destinations.
  • Assembly (finish) is often done at warehouses through postponement to place customization at a point closer to the customer.
  • Seasonal storage - used to store seasonal products.
  • Reverse logistics processing - usually done at warehouses
  • Spot stocking - temporary inventory positioning in strategic markets.
  • Full line stocking - reduces the number of suppliers that a customer must logistically deal with

Warehouse Operations

Warehouse operations must deal with:


  • Receiving - unloading
  • In-storage handling - movements performed within the warehouse, typically transfer and selection movements
  • Shipping - order verification and transportation loading


  • Slots (slotting) - specific assigned locations for material storage
  • Product velocity (volume movement) drives warehouse layout. High velocity items are positioned to minimize movement.
  • Active storage - materials handling processes and quick movement
  • Extended storage - longer term storage

Value-Added Services

Warehouses commonly also perform various value-added services such a product packaging, assembly and customization. Some of these activities full under the concept of postponement by delaying investment in a product or service until the last possible moment (Wikipedia).