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Warehouses and distribution centers are buildings utilized by businesses to perform essential roles in storage and the flow of freight through the supply chain. Therefore, you’ll need to understand how they each work to ensure you use them correctly.
I’ll teach you about warehouses and distribution centers, their benefit, and when you should use each one.
Warehouses are large buildings where products are stored for a long period of time.
They can also function as a temporary transition point as goods move along the supply chain.
Different areas of a warehouse are designated to hold certain items. To help keep freight secured and safe, warehouses utilize a variety of storage systems.
Warehouses have an average size of 17,500 square feet, but they can be as large as 500,000 square feet. Various entities use them to store their items, including:
All warehouses utilize docks where they can receive goods as they arrive. Workers at the facility use forklifts and pallet jacks to unload palletized cargo. You can find warehouses located close to different transportation lines like highways, airports, and railways.
Warehouses are so important to the supply chain, their number has increased steadily in the past few years. Consider some data I’ve provided that represents this growth.
Data from 2024 has shown there’s 21,000 warehousing businesses in the U.S., reflecting the continuous demand for secure storage facilities.
Related: How Much Warehouse Space Do I Need?
While warehouses are used to store freight, they’re used differently based on who owns them and the additional services they provide. I’ve listed the most common warehouses in the logistics industry to give a basic overview.
Private warehouses, sometimes referred to as proprietary warehouses, are owned and operated by a company for their exclusive use. They allow businesses to have complete control over their warehousing operations. However, they can be incredibly expensive to build and running them is time-consuming.
Public warehouses are owned and operated by either a government body or a third-party logistics (3PL) company. They provide storage to various customers and clients that need space to hold their items. Public warehouses are great for temporary storage, and they allow users to rent as much or as little space as they want.
Paying duties and clearing imported goods through customs can take a long time. That’s why bonded warehouses are used to hold these items until they can enter U.S. commerce. Products can be stored in a bonded warehouse for up to five years.
Cooperative warehouses are used by multiple companies that share distribution and storage resources. While various businesses run these facilities, they’re very common amongst farmers and wineries. A cooperative warehouse can help businesses reduce their costs.
Consolidated warehouses collect small shipments from various suppliers and combine them into one. They’re very attractive to newer businesses that don’t have a large amount of inventory.
Warehouses are popular in the logistics industry because of the various benefits they have to offer.
The benefits I’ve listed are more present in some warehouses than in others. For example, 3PL warehouses are more likely to lead to cost savings than managing your own. Keep the differences these facilities can have in mind when deciding which one is right for you.
Businesses typically use warehouses when their physical stores run out of space for their inventory. Using this type of facility provides them with the extra room they require.
However, some companies may only use a warehouse during certain parts of the year. This helps them manage demand fluctuations.
New businesses with limited logistics experience may outsource their warehousing to a 3PL. Using a 3PL will give them access to professionals that can manage their goods efficiently. Having this extra support is vital for new companies with a limited logistics network.
Distribution centers are an all-in-one solution storage, shipping, and fulfillment solution. Simply put, a distribution center is a warehouse with additional capabilities. All distribution centers are warehouses in some ways, but not all warehouses are set up for distribution.
They receive inbound shipments and store them in a designated area. When an order comes in, there’s an organizational structure in place to allow warehouse staff to retrieve it and load it into an outbound vehicle to its destination.
Distribution centers for retail items are typically located near neighborhoods and businesses. This helps increase the speed of final delivery.
Distribution centers more focused on B2B deliveries are more likely to be located near major highways and common shipping lanes.
These facilities are meant to store freight for a short time until shipping, which means cargo flows through them more frequently than warehouses. This makes them more customer-centric as well. The main concern of a distribution center is to ensure buyers receive undamaged bulk shipments in a reasonable amount of time.
Some businesses use distribution centers to ship goods to customers, while others use them to send their items to other businesses. Some buildings can provide other services as well. To highlight their differences, I’ve provided a list of the different types of distribution centers.
A retail distribution center is used by retailers to send goods to their physical stores. Cargo is sent to the store on a pallet, which is then broken down once it arrives. Shipments from a retail distribution center typically contain diverse products
Wholesale distribution centers ship goods in bulk to other businesses. This can include retailers or industrial clients. Many wholesalers specialize in selling specific types of products. Therefore, shipments contain less diverse items.
E-commerce fulfillment centers are run by online businesses. This building is used to ship goods to a customer’s home.
Cross-docking distribution centers minimize the amount of storage shipments receive. When an inbound vehicle arrives at the building, warehouse staff unload the cargo and quickly load it into an outbound vehicle. This reduces storage time and allows freight to flow smoothly to the next destination.
Related: Retail Shipping Warehouse
Distribution centers have a unique set of benefits that businesses can enjoy.
A 3PL distribution center has the added benefit of helping you save on your expenses.
Shipping goods to customers or other businesses from your physical store isn’t efficient, especially if order volume is through the roof. Distribution centers can help by letting you briefly store and ship goods in bulk. As a result, you’ll be able to bolster your logistics network.
Distribution center are also a must for e-commerce businesses. These businesses don’t have a physical storefront. Therefore, a distribution center is the best way for an e-commerce business to store and ship their goods.
Fulfillment & Distribution provides a variety of services that can help you store and ship your products. Our facilities are run by logistics professionals that have decades of combined experience. We also have facilities throughout the U.S. that will help you reach more customers.
This includes:
Partner with Fulfillment & Distribution today by filling out your quote today. You can also contact us at (866) 989-3082 if you have more questions about the services we offer.
