Refers to having the entire facility under the financial and administrative control of the firm, i.e. the firm owns the product and also operates the warehouse. The actual facility can be either owned or can be taken on lease, for a short period.
The major benefits of this warehouse are:
- Control: The enterprise has complete decision-making authority over all activities in the facility thus enabling integration of warehousing operations with other internal processes of the firm.
- Flexibility: Operation policies and procedures can be formulated and altered to suit individual needs.
- Cost: The basic objective of this warehouse is not profit – making, thus the cost aspects are less
- Marketing: An intangible benefit is a marketing advantage over other firms due to the firm‘s name attached with the warehouse thus enhancing customer perception.