Why do companies need warehouses? So, let's talk about warehouses. We need warehouses in a variety of different situations. One of them is to consolidate our raw material supply. So, let's imagine a company that has two plants and three raw materials suppliers. Now we could shift from those raw material suppliers directly into both of our plans and it'll be fine, but there is a better way and that is to use a warehouse in between them that receives raw materials from the three suppliers and then ships out, assembled assortments as needed. Now, this has several advantages. Number one, efficiencies and we can create efficiencies in transportation, because we focus on each link specifically and make it really good. We can achieve efficiencies in inventory, because we can hold our inventory where it's needed and just as much as is needed. And then finally, in production, because our production facilities get the resupplies they need when they need them. The other advantages are risk pooling, we hold inventories just in one location rather than scattered across this network of companies. And then finally, our service level would be much hire than they would be otherwise. Even in more complex examples, warehouses still provide us with some benefits. Now, let's look at the case what we the same two plans and five different customers. You could shipped out from those two plans to the five customers individually, but the customer want an assortment of product produced by both plans. So you instead should use three warehouses to consolidate your output from the two plans, create assortment and then ship them out to your five final customers. This has the same advantages that we had before. It's more efficient. It reduces the risk and it provides the customer with better service. Now, let's review the three basic functions of warehousing. One is movement. Warehouses are meant to facilitate movement of products by receiving them, by transferring them across the warehouse, by picking them when their need and by facilitating shipment. The second one is storage. You want to have an assortment of products in you warehouse available readily for when the customers want them. Now, that storage may be in shorter term or longer term in the case of less used items. And finally, information. Information about your inventory. When it's coming in? What you currently have? When it's going to go out? There's different types of warehouses. To the left, we see a private warehouse, which a company built just for their products. They own it. They run it and it only serves their business. To the right, we see a public warehouse where there are products for multiple companies and the shipping process is managed by a specialty warehousing company, sometimes also known as a third party logistics company. They manage the warehousing and sometimes even the transportation process for their customer, the different shippers. You've seen what's outside of a warehouse, now let's take a look inside. Now in order to understand what goes into a warehouse, we have to just review really quickly what makes a warehouse really good? And those are three things. Number one, its speed. Once the product is demanded by the customer, we want to be able to ship it out as quickly as possible. Number two, quality. We don't want to send our customer the wrong item, because that would really make them angry. And third, productivity. We want to recycle as much as possible, think about the environment. We want to reduce as much as possible and we want to reuse, as much as possible. Inside the warehouse, there are several things going on. We will move around products using forklifts, dollies and carts and we're going to use them to unload our trucks. We're going to used them to move products around the warehouse. And then finally, we're going to used them to load our trucks backup and ship the product out. Warehouses are full of racks and shelves, because that's where we store the products in. Conveyors and sorters are where gets really exciting, that's what we used to move the products about in the warehouse. Right before we get ready to ship out the product, we're going to assemble and package the orders.