A business organisation does not operate in isolation. It is a part of the society and the economy and needs support to function smoothly. There are a lot of intermediate services that an entity requires to perform its functions. Some such services are communication, transportation, warehousing etc. Let us take a look at these.
A business organization must have constant contact with the outside world. There needs to be an exchange of information and ideas. This is why effective communication is the cornerstone of any successful company. A company must communicate with its employees, customers, buyers, suppliers, the government etc.
For any communication service to be effective it must be fast and inexpensive. In the last few decades with the rapid technological advancements, communication has become highly effective now. In fact, the advancement of the internet (with its communication capabilities) is the reason we have a global economy.
There are two main communication services in India that businesses generally rely on,
- Postal Services: The Indian Post Office is an important part of our society. They provide various types of mail and telegraph services pan-India. But did you know that post office also provide financial services similar to banks?
- Telecom Services: Telecommunication infrastructure is a very important part of a country’s infrastructure and essential to its progress. These services include cellular services, internet services, DTH services etc.
Transportation is concerned with the transport of goods and raw materials. However, transportation is not only the freight but all the auxiliary services associated with them.
The main function of transportation is to overcome the barrier of place. The goods will be made available to the end consumer no matter where they are located in the world. They will be transported from their place of production to their place of consumption.
To keep up with an expanding business, transportation services must also keep up. One main factor is the infrastructure of the country. Roads, railways, ports etc must be taken care of. It is both the responsibility of the industries and the government.
Once the goods are produced they also must be stored. There is generally a lag time between production and consumption. This systematic and scientific storage and maintenance of goods and raw materials is called warehousing.
Warehousing isn’t merely storing goods in a shed. It is a logistics centre, which provides a variety of services. They are responsible for inventory management, which includes providing the production departments with the right quantity of goods at the correct time intervals.
There are types of warehouses based on the ownership of them. Some of them are
- Private Warehouse: Owned and operated by the company itself. Private warehousing requires huge capital investment but it provides the company with full and complete control. It is ideal for organisations that have a huge inventory and a high turnover like for example a chain retail stores.
- Public Warehouses: Here you use a warehousing facility in exchange for a fee. While the ownership will not be the company’s it is a cost-effective method. The government will regulate such warehousing facilities. The owner of a public warehouse is expected to take reasonably good care of the goods.
- Bonded Warehouse: These are warehouses for imported goods. The goods will be in storage at the facility till the importer pays his custom duty and other such taxes. So the goods are said to be in a bond.
Solved Question for You
Q: What is a Cooperative Warehouse?
Ans: At times certain industries and cooperative societies (like agricultural societies) will set up their own warehouse. The warehouse will be available to the member organisations for various warehousing activities. Here the ownership will be the society.