PROBLEMS OF WAREHOUSING

PROBLEMS OF WAREHOUSING

The positive impacts of warehousing notwithstanding, warehousing is associated with some problems. The problems of warehousing are as follows:

High cost – building: A warehouse involves the purchase of land, materials and hiring of labour. This take a huge sum of money to afford. After completion, you would need to fit up the warehouse with the state-of-art equipment and employ additional qualified staff and these involve cost.
Advancement in technology can be a hurdle too. Workers must be able to operate the high technological equipment in order to keep up with changing technology. If the workers are unable to operate the equipment, it may show down the movement and flow of goods leading to a decrease in efficiency and effectiveness.

The equipment are prone to break downs – when a break down occurs, it will affect the processes of the warehouse.
Creation of artificial scarcity – The hoarding of stock in warehouses causes the goods to be relatively scarce in the market. This creates room for customers to be exploited.

Spoilage – when some goods are kept in warehouses beyond necessary, they deteriorate and wear-out.

Obsolescence – each day that passes, new products are produced, therefore goods stored for a very long time can easily go out of fashion leading to cost customers and profits.

Frozen capital – Goods stored in warehouses represent tied up capital that could have been used in various profitable ways. When goods are stored, financial energy are locked up.