What types of storage are there, and which one should you choose? A guide
Do you remember our last article on what logistics is all about? If so, you’ll already know that a warehouse isn’t just a place where pallets are stored. In this article, we’ll discuss the different types of warehouses based on their purpose. Yes, there are many types of warehouses! We’ll explain how to distinguish between them based on various criteria and advise you on how to choose the perfect one for you.
Classification of warehouses by structure
You’ve probably guessed that warehouses are classified based on their structure. You’re right, because this determines what we can store in them. Based on the type of structure, we distinguish three main types of warehouses:
- Closed warehouses: These are halls designed for storing goods sensitive to external conditions. Here, you can control temperature and humidity.
- Semi-open warehouses (sheds): They have a roof but lack complete walls. This is the ideal place to store products that require only protection from the rain.
- Open warehouses (storage yards): This is the cheapest option, allowing you to store goods that are completely weather-resistant, such as aggregates, containers or certain building materials. They offer no protection from rain.
There are also specialised warehouses designed for explosives or fuels. Choosing the right warehouse therefore depends on what raw material or product you have.
What is zone-based storage and when should it be used?
Imagine your kitchen as a logistics warehouse. You keep your cutlery in one drawer and your plates in a cupboard. That is exactly what zone-based storage is all about. It is a method that allows you to store your stock in fixed, dedicated sectors.
In this system, every product has its own ‘designated spot’. Goods are usually sorted by type. This allows, for example, chemicals to be stored safely away from food.
Why choose zone-based warehousing?
- Organisation: Staff always know where to store a particular item.
- Specialisation: You can create zones designed for storing products with specific requirements (e.g. a cold store).
What is chaotic storage?
Sounds daunting? Chaos in logistics has negative connotations, but here it means effective use of space. If you have a warehouse management system (WMS), you can store pallets wherever there happens to be free space.
What are the benefits? The computer system remembers the location of each pallet for you. This solution allows you to store more goods in the same space, eliminating empty gaps. The key here, however, is technology – without it, inventory management in this model is impossible.
What are the types of racking storage?
This is the most common setup in logistics. High-bay warehouses allow you to utilise the full volume of the space. This means you can store a lot in a small area. By comparison, low-bay warehouses are cheaper to build but take up more floor space.
In rack storage, we distinguish between two approaches:
- Pallet racking: This allows easy access to every load unit. You can store a diverse range of goods on them.
- Drive-in racking: This allows you to store large quantities of homogeneous goods, but with limited access to specific pallets.
When is block storage suitable?
This is the simplest method. It involves stacking goods directly on the floor, in blocks. You do not need racking.
This method is ideal for storing materials such as drinks in crates or raw materials in sacks. It also works well for storing bulk materials in piles (in case of open-air warehouses).
The main advantage? Low costs. The disadvantage? Difficulty accessing goods located in the middle of a block. If you need to store goods with high turnover and variety, this system can be problematic.
How does the FIFO system differ from LIFO?
These are strategies that determine how goods are stored and dispensed in production and distribution processes.
- FIFO (First In, First Out): Goods that arrive first are dispatched first. Essential when you need to store products with an expiry date (food).
- LIFO (Last In, First Out): The last to arrive is the first to leave. This allows for the storage of non-perishable goods, such as coal, steel or raw materials for production, where the delivery date is less important.
What is cross-docking and transhipment warehouses?
Sometimes the best way to store goods is... not to store them at all.
Cross-dock transhipment warehouses are used for immediate dispatch. Goods arrive at the warehouse from various locations, are sorted instantly and directed to the dispatch gates.
Dispatch takes place almost immediately. This is an ideal solution for distribution warehouses, where time is of the essence. Although these are facilities designed for storage, in practice goods spend only a few hours there.
Specialised warehouses and temperature-controlled storage
Some goods must be stored under strictly defined conditions. Closed warehouses equipped with refrigeration systems are essential for the food and pharmaceutical industries. Or for storing lithium-ion batteries, which we do at the ADECON warehouse.
Here, the functions of warehouses go beyond mere storage. We must store the product in such a way that it does not lose its properties. System failures in such facilities are very costly, which is why advanced monitoring technologies are used here.
Is automated warehousing cost-effective?
We are entering an era where warehouses equipped with advanced automation systems are becoming the norm. In other words, automated warehouses are playing an increasingly significant role in logistics. Robots and stacker cranes allow goods to be stored at great heights and retrieved without human intervention.
In such warehouses, advanced systems (WMS, automation) represent a huge investment cost, but they enable 24/7operation. Thanks to them, a company can store more, fulfil orders faster and minimise errors in warehouse processes. This is the future of effective logistics management. Remember, however, that automation pays off when you operate on a larger scale.
What is Consignment Stock?
It is a specific ownership model. In a consignment warehouse, the goods are physically located at your premises (for example, in your production warehouse), but legally they still belong to the supplier. You pay for them only when you take them into production or sell them.
The benefit for you: You don’t tie up your own capital in stock, yet you have the goods to hand. You transfer the investment risk to the supplier.
How do you choose the right storage solution for you?
There is no one-size-fits-all solution for how to store goods. It all depends on the specifics of your business.
- Do you have raw materials that are rain-resistant? Choose open-air warehouses.
- Do you trade in electronics? You must store them in a secure, dry zoned or automated warehouse.
- Is fast distribution important to you? Opt for cross-docking and efficient dispatch.
Every business must analyse for itself which warehouse functions are a priority: whether low storage costs, easy access or fast turnover.
Comparison of storage types - Table
Still wondering what to choose? Take a look at this summary:
Storage typeInvestment costFlexibilityEfficiency (access)Space required
BlockVery low High Low (difficult access to the centre) Medium (depends on stacking)
Rack (Row)Medium Medium High (access to every pallet) Large (aisles required)
AutomatedVery high Low Very high Small (maximum packing density)
Cross-dockingLow (infrastructure) Medium Extremely high Minimal (no storage)
Remember that modern logistics often involves hybrid solutions. You might have a racking zone for general cargo and a block storage zone for beverages. The key is data analysis and process optimisation.
FAQ – Frequently asked questions about types of storage
1. Which type of storage is the cheapest?
Block storage is the cheapest to implement, as it does not require the purchase of racking. However, with a large number of stock-keeping units (SKUs), it can generate hidden costs associated with longer search times for goods.
2. Will chaotic storage work for a small business?
Yes, but only provided you have a WMS system. Without digital support, on a small scale, it is better to opt for zone-based storage (fixed locations) to maintain order.
3. What is a WMS system and do I need one?
A WMS (Warehouse Management System) is software for managing warehouse operations. If you have more than a few dozen stock items and want to eliminate errors – yes, you need one.
4. What are the benefits of cross-docking?
The main benefit is faster delivery to the customer and elimination of storage costs. It is the ideal solution for fast-moving consumer goods (FMCG).
5. How does a fully automated warehouse differ from a semi-automated one?
In a fully automated warehouse, most operations (picking, transport, stowing) are performed by machines without operator intervention. In a semi-automated warehouse, a person works alongside the machine (for example, a forklift lifts the operator, but it is the person who retrieves the goods from the shelf).
Optimise your logistics with ADECON
Do you feel that your current warehousing system is holding your business back? Or perhaps you’re planning a new investment and aren’t sure whether to opt for racking or full automation?
At ADECON, we put the most effective warehousing methods into practice every day. We’ll help you choose a solution that will boost the efficiency of your supply chain and reduce operating costs.
Get in touch with us today and see how we can streamline your warehouse!