Usually, goods are not sold or consumed immediately after production. They are held in stock to be available as and when required. Special arrangement must be made for storage of goods to prevent loss or damage. Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when needed.

Functions of Warehousing :

1. Consolidation: The warehouse receives and consolidates materials/goods from different production plants and dispatches the same to a particular customer on a single transportation shipment. 

2. Break the Bulk: The warehouse divides the bulk quantity of goods received from the production plants into smaller quantities and then transported according to the requirements of clients to their places of business.

3. Stock Piling Goods or Raw Materials which are not required immediately for sale or manufacturing are stored in warehouses to be made available to business depending on customers demand. This type of warehouse is also known as the storehouse of surplus goods.

4. Value Added Services: Provision of value added services such as in transit mixing, packaging and labeling is also a function of modem warehousing.

5. Price Stabilization: Warehousing performs the function of stabilizing prices by adjusting the supply of goods according to demand. Financing warehouse owners provide loans to the owners on security of goods and further supply goods on credit terms to customers. The warehouse keepers issue a receipt when goods are kept in warehouse. This receipt can be used as security to get loans from banks and owners. In this way, it also helps in financing.