This is generally recognized as one which acts as a wholesale supplier to other units, department or sub stores. It is located in a central point to serve the whole organization i.e. its departments/branches.
Advantages of a central warehouse
- A wider range of goods is provided for all users
- Stock of tools, fixtures, equipment and spares can be kept to a minimum
- Economies in storage space are likely to be obtained
- The use of modern handling methods is facilitated
- Better purchase prices are possible because of bulk buying and delivery to a single point
- Inspection and testing of goods can be more effectively organized
- Opportunities for standardization are improved
- It may be possible to provide the same level of service to all customers
Disadvantages of central warehouses
- Extra transport costs may be involved
- More staff may be required
- If the organization is not efficient, there may be recurrent shortages at the point of usage.
- There is a tendency for stock investment to rise if the stock level is not strictly controlled.
- There is the risk of greater loss by fire