Storage: Understanding Its Operation

Understanding the importance of storage is a requirement, since modern management requires greater rationality in maintaining inventories. Storage represents capital and, if not rationalized, becomes detrimental to the company’s financial health.

The storage is more than a necessity in the logistics system and should be seen as an economic convenience. Goods can be placed at demand points without the need for storage in stocks.

However, the effect of this attitude may be the loss of production, poor service, inefficient use of transport services and all of this leads to loss of income and increased expenditure.

Storage is essential for the organization

A company can only put aside storage when it has an excellent organization in programming and management of the supply processes. However, to reach this level, managers must be trained and attentive to the movements of demand, knowing exactly when to begin the process of replacement, whether raw material or goods and inputs.

And that is exactly where failures happen, since there is difficulty in capturing information from the market and presenting numbers faithful to the need. This means that, as long as there has been no real alignment between production and sales, there will always be a need for storage at any point in the production chain.

With this in mind we can understand that the storage service has a direct impact on the level of service offered to customers. The fundamentals of storage must therefore be known and structured in such a way as to help companies achieve their objectives.

The storage unit is not as simple as it sounds. Storage management is complex because of the interdependence of the company’s departments and the supply chain.

Some factors are important to understand the importance of storage and we can understand this point below:

  1. THE NEED TO COMPENSATE FOR THE DIFFERENT CAPACITIES OF THE PRODUCTION STAGES

This need arises when it becomes necessary to optimize the preparation of machinery and also when it is necessary to maintain a technical reserve of inventories to guarantee production.

  1. SEASONAL EQUILIBRIUM

The seasonal balance requires the maintenance of storage, especially when it comes to agricultural products, such as the harvesting of certain products, or when preparing products for a festive date, such as the holiday season.

  1. ASSURANCE OF CONTINUITY OF PRODUCTION

Storage is crucial when it is necessary to regulate production, especially when the supply depends on raw materials or semi-finished products, which are only achieved with long-term programming.

  1. COSTS AND SPECULATION

The storage is also important when it is necessary to await better chance of profit or stabilization of external situations, as the prospect of rising prices of products, for example.

However, there are also factors that have negative impacts on storage, such as physical facilities, labor, equipment and material handling in the warehouse.

The storage requires physical space near the organization and may the products be handled and transported in accordance with the need for distribution. On the other hand, it is important to understand that the company has practical reasons for storing, reducing transportation and production costs, coordinating supplies and demand, assisting in the production process, etc.

The storage units Golden in any business is a vital part of the organization. In practice, it is one of the great pillars of the internal logistics of the organization and must be taken care of so that the company can continue with its activity within the necessary strategic planning.