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SS2: COMMERCE - 2ND TERM

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  1. Marine Insurance | Week 1
    3 Topics
  2. Non-insurable Risks | Week 2
    4 Topics
  3. Banking - Central Bank of Nigeria | Week 3
    3 Topics
    |
    2 Quizzes
  4. Types of Account | Week 4
    4 Topics
    |
    2 Quizzes
  5. Warehousing | Week 5
    1 Topic
    |
    1 Quiz
  6. Capital | Week 6
    2 Topics
    |
    1 Quiz
  7. Credit | Week 7
    3 Topics
    |
    3 Quizzes
  8. Profit | Week 8
    2 Topics
  9. Turnover | Week 9
    3 Topics
    |
    2 Quizzes
  10. Business Law | Week 10
    8 Topics



Lesson 5, Topic 1
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Meaning of Warehousing

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This is the process of storing or keeping goods such as raw materials, semi-finished products, and equipment in a safe place until they are needed. Goods are usually produced ahead of demand which helps to ensure uninterrupted and regular supply wherever they are needed.

Warehouse: This is referred to as a place or storehouse where goods are kept until they are needed. It helps to provide the products to consumers at the right time and right place.

Warehousing

Functions of Warehousing 

(i) It encourages international trade e.g imported goods can be stored before duties are paid on them.

(ii) It helps to ensure an effective check on goods by the customs authority.

(iii) It provides an opportunity for importers to sell goods which are still in the warehouse.

(iv) It enables goods to be pre-packaged, branded, and labelled while in the warehouse. Goods can be processed until they are ready for sale.

(v) It ensures adequate security of goods in which their duties are yet to be paid.

(vi) It provides the opportunity for customs to calculate the total duties to be paid without making mistakes.

Importance of Warehousing

(i) Warehousing helps to store the goods safe in anticipation of demand.

(ii) It has helped to reduce fluctuation in prices and enable goods to be produced ahead of demand.

(iii) It provides job opportunities for different people.

(iv) Government as well as individuals can generate revenue from the warehouse.

(v) Goods can be made available when needed because they are produced ahead of demand.

(vi) It provides protection and security for the goods.

(vii) It helps to check smuggling, as goods are seized and stored in the warehouse and sold at the appropriate time.

(viii) Seasonal goods are made available through the use of a warehouse.

(ix) It allows manufacturers to complete the process of packaging and branding while the goods are in the warehouse.

(x) It helps to create a place utility goods are taken to the customers at the right time and place.

Factors to be considered in Siting a Warehouse

1. Location of the Factory: One factor which must be taken into consideration is the proximity of a warehouse to the production ground i.e. factory.

2. Nearness to the Distribution Centres: A warehouse has to be located near the distribution centres.

3. Operating Cost: The operating cost of the warehouse must be considered. It has to be located where the operating cost will not be too high.

4. Cost of Building Warehouse: Before siting a warehouse, the cost of building or renting has to be carefully considered.

5. Nearness to Market: A producer will consider the location of the market before siting his warehouse.

6. Transportation: The mode of transportation must be taken into consideration. The warehouse must be sited in a  place that is accessible by road or rail.

Types of Warehousing

1. Wholesale warehouse: It is also called a goods warehouse. The wholesaler stocks his goods in this warehouse.

2. Manufacturer warehousing: It is owned by the producer or manufacturer which is used for storing goods. The manufacturer maintains two types of warehousing; (a) raw materials and (b) finished goods warehouses respectively.

3. Bonded warehousing: This is a warehouse where goods that are imported are kept until the duties on them are paid. Bonded warehouses are located near the seaports and dockyards.

4. State warehouse: This is a warehouse owned by the government where prohibited or seized goods are kept until they are sold. Contraband goods are kept in this warehouse also known as customs warehouses until they are auctioned to the public after a period of time.

Advantages of Warehousing

(i) It helps to meet the needs of customers throughout the year.

(ii) It enables wholesalers to complete their operation on goods such as sorting, packaging and grading.

(iii) Exports which cannot immediately be loaded into ships or cargo planes are kept in the warehouse at the ports.

(iv) It facilitates regular production by manufactures, as warehouses are available for the goods to be stored.

(v) It encourages mass production.

(vi) It helps to reduce smuggling, as contraband and confiscated goods are kept in the warehouse until they are auctioned or sold.

(vii) It enables the correct duty on goods to be worked out and also helps the importers to delay payment.

(viii) It creates employment and generates revenue.

Disadvantages of Warehousing

(i) Some goods are tampered with and adulterated in the warehouse.

(ii) Some importers deliberately abandon their goods in the warehouse while pursuing a more lucrative business.

(iii) Hazardous products are known to have been abandoned in warehouses in Nigeria.

(iv) There is a high rate of pilfering in some warehouses.

(v) Many warehouses in Nigeria are poorly managed by unskilled individuals.

Responses

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  1. Page was really helpful. It contains the requirements needed e.g the advantages and disadvantages of warehousing that may not appear in other pages. I really found this page helpful and I know others will find it helpful too.

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