If you are an e-commerce or manufacturing business, you know that you need a space to store inventory. But which one should you choose: a warehouse or a storage facility?
Both are essential in inventory management. However, while often used interchangeably, warehousing and storage are different services.
Storage is a broad concept that includes keeping items for selling or shipping later. On the other hand, warehousing is a specific component of logistics meant to store goods for industrial or commercial operations.
This article compares warehouse vs storage to ensure your business is investing in the right option.
Differences Between Warehousing and Storage Services
Warehousing and storage involve keeping goods, raw materials, or products secure until selling or shipping time.
Despite having similar functions, some factors make a warehouse different from a storage facility. Here’s a table for a quick comparison.
| Comparison Factor | Warehousing | Storage |
| Types | Public, private, bonded, and refrigerated warehouses | Self, mobile, and specialised storage facilities |
| Capacity | Large | Small |
| Location | Near transportation hubs | Near residential areas |
| Function | With value-added services like packaging and transport | Limited to storage services of items in small volumes |
| Technology | Employs automated systems and equipment | May or may not use advanced technologies |
| Cost | More expensive due to added services and resource needs | More affordable due to limited services and resource needs |
Types
There are different kinds of warehousing and storage services. These help you identify which warehouse or storage type suits your business inventory. Here are the most common options.
Types of Warehousing Facilities
- A public warehouse is an enclosed area for rental or lease to small and medium-sized businesses. Multiple companies use one shared facility to maximise space and profit.
- A private warehouse is owned by a single large retailer, manufacturer, wholesaler, or distributor. It is a considerable investment but offers better control and security.
- A bonded warehouse is a space licensed by customs authorities. It stores imported goods until taxes are settled.
- A refrigerated warehouse has a climate-controlled environment for keeping perishable items like food, medicines, and flowers.
Types of Storage Facilities
- Self-storage facilities are lockable units that individuals or small-scale business owners with minimal inventory can rent. There is also climate-controlled storage to protect items from temperature fluctuations. Different facilities have specific rules of what you can and cannot store inside.
- Mobile storage delivers portable units to your residence or business. You can pack these units with inventory and then ask the facility to pick it up and store it in their warehouse. It’s a good option when you don’t need regular access to stored items.
- Specialised storage facilities are for storing specific and sensitive items. For example, silos are for storing grains in bulk, and cold storage is for perishable goods. There are also facilities for storing vehicles and documents (e.g. medical records and legal files).
Capacity
Storage facilities are small. Their size can range from a small room to a large building. Warehouses, on the other hand, are big enough to accommodate massive racks, large goods, and equipment like pallet trucks.
Because of their facility size differences, storage rooms or areas are more suitable for small or starting businesses with limited inventory. Large-scale operations or manufacturers are better off with warehousing services that can keep bulky goods.
Location
Warehouses are large facilities often located in remote areas with ample land. They are near transportation hubs, which helps facilitate faster and more cost-effective shipping.
In contrast, storage facilities are usually smaller and can easily be situated in residential or commercial areas, making them accessible to most customers.
Function
Warehousing is a comprehensive solution for all your supply chain management needs. In addition to providing storage space for your inventory, warehouses also offer a range of supporting services. These include product assembly, labelling, packaging, kitting, and shipping.
In contrast, storage facilities primarily focus on storing smaller quantities of goods and do not provide these value-added services. While they lack the additional resources of warehouses, they are more cost-effective for smaller businesses that can handle in-house packing and delivery.
Technology
Storage facilities generally handle goods in small volumes, so product handling, inventory management, or tracking technology is often unnecessary.
In contrast, technology plays a crucial role in warehouses. For example, without a warehouse management system (WMS), staff may struggle to track all items moving in and out of the facility. This can lead to errors and complaints that can significantly impact your business.
With technology in place, it becomes easier to streamline various activities within a warehouse. It also enhances its security. Technology also helps staff complete their tasks more efficiently.
Cost
A warehouse is generally more expensive than a storage facility due to its larger space and additional services. Running a warehouse also leads to ongoing maintenance, rent, and security expenses.
Additionally, warehouses utilise technology, delivery trucks, and equipment that require regular maintenance, upgrades, or repairs. In contrast to storage facilities, warehouses also need a larger workforce to operate effectively.
Which One Should You Choose: Warehousing or Storage?
There is no fixed answer when choosing between warehousing and storage services. The best solution depends on your business operations, needs, budget, and future goals. Here are factors to consider:
- What are the types and sizes of your products? Large, bulky items may require pallet racks in spacious warehouses. If you have smaller items, shelves in a compact storage room may suffice.
- How much storage space do you need? Vertical storage solutions in large warehouses are best for bulky goods, whereas long-span shelves in small storage rooms are perfect for lightweight items.
- What is your inventory turnover rate? An easily accessible storage facility may suit your fats-moving items. Still, warehousing may be a better option for long-term storage.
- How much is your budget? Small-scale companies with a limited budget may benefit more from affordable storage units. On the other hand, large businesses with fluctuating needs may find a 3PL warehouse more cost-effective.
Employ the Right Storage Solution for Your Business
Understanding the nuances of warehousing and storage services is only one step in streamlining inventory management. Once you make your choice, implementing it is equally crucial.
If you think warehousing is the right fit for your business, a reliable 3PL partner is what you need. Contact Effective Logistics on 03 8376 3300 for enquiries. We offer bespoke warehousing services to ensure your goods are efficiently stored and managed.
