Anyone who seeks fulfillment services for the first time is usually unaware of the differences between warehouses vs distribution centers. They look almost identical from the outside, and both are used for receiving, storing, and moving products around the building. Despite their striking similarities, the two are used for different purposes depending on a business’s individual needs.
The difference between warehouses vs distribution centers is that warehouses are used for long-term storage. Distribution centers can be used for storage as well as for numerous fulfillment and distribution services, such as product mixing, packaging and cross-docking.
In this article, we will discuss the differences between a warehouse and vs distribution center, their benefits and when you should use each.
Table of Contents
A typical warehouse is a place to store products for an extended period of time. Companies use warehouses to store their product until it is needed again. Though there are infinite reasons for wanting to utilize a warehouse, some reasons include storing overflow stock, off-season products, or even holding the entire stock of an item after manufacture for shipment to a large-scale retailer.
There are three types of warehouses that are commonly used to store your goods. They’re largely similar to one another, but each has their own differences that are better suited for certain situations.
Public warehouses are a common option that individuals and businesses use. These types of warehouses are open to the general public which makes them easy to access. They also make a good option for small and medium-sized businesses that don’t have the money to afford their own warehouse.
A private warehouse is pretty much the exact opposite of a public one. Businesses that can afford to have their own warehouse and manage the processes within them usually take this option. Using a private warehouse gives the owners of their goods more control over what happens to them.
Bonded warehouses are where the goods that you import will be held until you pay your customs duties. The U.S. government's customs authorities control the operations of these warehouses.
Warehouses are a great long-term storage option and the services they offer make it easy to keep track of and control inventory. There are numerous other benefits that you will reap when using a warehouse to store your goods.
Warehouses are extremely large in size. This provides enough space to account for all products, functions, and employees, as well as the possibility of multiple businesses stocking the warehouse with their goods. Warehouse staff can organize and optimize the space they have for large quantities of freight that customers want to store there.
Due to the immense capacity capabilities of warehouses, companies don't have to slow down on producing new goods as a means to prevent themselves from overwhelming warehouses. Warehouses can provide a large enough space for companies to store mass-produced goods consistently.
This excess of warehouse space allows companies to make and store goods well before they need to be sold. For example, seasonal goods can be made and stored well before their release into stores.
Warehouses are typically organized in a very particular way. Everything is clearly labeled, locations of items are recorded in a computer database and sometimes an identification barcode is assigned to each item.
Warehouses also utilize a warehouse management system that keeps track of where everything is located. This makes it easy to find anything in the warehouse, even if it’s packed away somewhere hard to reach.
Most warehouses are equipped with many remote surveillance cameras that can view the entire warehouse from several angles. In addition to that, facilities are generally gated, guarded, or restricted in some way, to prevent unauthorized access.
Warehouse Security Officers guardthe premises 24 hours a day, so the stored goods are kept safe and secure. This is especially important for anyone dealing with a shipment of high-value items or volatile components.
The more packing and shipping your goods go through, the more likely it is that they can sustain damage. Fortunately, using a warehouse reduces the possibility of this happening to your goods.
In a warehouse, your goods will be stored somewhere safe for a long period of time. They won’t be constantly moved from one place to the next. Thanks to the safe storage and less movement, goods are much safer at a warehouse than they would be when constantly moving from place to place.
Using a public warehouse owned by a 3PL is a much cheaper option to go with. As we stated before, this is especially useful when your business is small or medium-sized.
Running your own warehouse costs a good deal of money. Unless your business is consistently having high volume orders, it makes no financial sense to go through the trouble of running your own warehouse.
A distribution center is similar to a warehouse because is also used to store products. However, a distribution center offers more than just storage options. They also provide numerous fulfillment services. Third-party logistics (3PL) distribution centers provide fulfillment services like order processing and prep, quality checking, shipping, and receiving and dealing with returned goods. Customer orders can be handled without the retailer ever having to lift a finger!
As with warehouses, there are multiple types of distribution centers that you can utilize for your fulfillment needs. They are:
Neither one is better than the other, rather these differences indicate how each of them is operated.
A conventional distribution center is the most basic type. In these distribution centers, workers move freight and goods around the warehouse manually. This means that workers lift and move the goods themselves or use equipment to move their goods.
As mechanized distribution is similar to a conventional one. Goods can be moved around the distribution center manually, but can also be assisted with sortation systems. These systems help distribution centers run much more smoothly.
In an automated distribution center, all movement of goods is done completely with machinery. These types of centers manage the goods within them efficiently and quickly. Despite the differences in how they function, distribution centers are roughly the same as far as how they’re built.
Unlike warehouses, distribution centers are multi-faceted, high-energy operations that offer fulfillment services, though the way those services are achieved varies from building to building. Because of that, they are also sometimes called “fulfillment warehouses.” They can also double as a warehouse or have a warehouse component, though if they don’t have that capability, they can be used in tandem with a separate warehouse just as easily.
One of the benefits of using a distribution center is that they are often airconditioned or offer refrigeration for goods. If you have goods that are sensitive to the heat, the air conditioning of distribution centers will protect them when you require storage or fulfillment services.
Additionally, some fulfillment centers have refrigeration options. Distribution centers that have this feature are great when you need to store perishable food items.
Modern distribution centers are equipped with an abundance of technology to streamline the storage and fulfillment process. For the most part, the system for operating a distribution center has become almost completely paperless, because everything can be achieved digitally with the help of computers and handheld technology.
Reducing paper records not only speeds up the filing process, but also the amount of space that was previously needed to store the boxes of paper records that the company was required to keep. Some distribution centers have more automation than others and utilize technology like conveyor belts, automatic sorting, weighing, and even self-operating forklifts.
Distribution centers also allow for a greater degree of tracking and transport transparency to the customer and business owner, to provide better customer service. With the use of Radio-Frequency Identification (RFID), GPS, Universal Freight Operating System (UFOS), other technologies, or some combination of those, companies are able to track products with great accuracy.
While warehouses do use their own technology systems to store goods, they don’t utilize it to the extent that distribution centers do. Thanks to inventory management systems, customers and business owners alike can watch track their products during the whole shipping process.
Using a distribution center saves you time when it comes to shipping goods to customers and retailers. At a distribution center, workers can pack and label your boxes for you. Afterward, your goods can be loaded onto an outbound truck.
If you were performing these tasks yourself, it would be a much longer process. Distribution centers save you this time because their workers can perform all these functions for you.
Shipping goods from a distribution center is much faster than from a warehouse. Many 3PLs have numerous distribution centers throughout the country.
When goods arrive at one facility, they can quickly be shipped out to another until they reach one close to the destination of your shipment. This method is much faster than simply shipping goods out from one central warehouse location.
Distributions centers offer a variety of different services that require a certain degree of coordination and attention to detail. These services are best utilized with an eCommerce business since they make the order and shipping process easy and cost-effective for the business owners and quick for the customer.
At R+L Global Logistics, we can perform all of these fulfillment services for you at an affordable rate.
If long-term storage is all you’re looking for, then using a traditional warehouse is your best option. With a warehouse, your goods, whether it be seasonal home decor, retailer returns or other merchandise, will be kept safe and secure, for as long as you need them stored. When you’re ready to move the products, they can locate and ship your order out with the utmost efficiency, should you need it back or wish to relocate it.
In the case of running an online shop, you should utilize a distribution center. A distribution center can store your goods for a short period of time until they have to be shipped out to your customers. Distribution centers offer the best solution to fulfillment issues or delays and can ship your product out the moment an order is processed.
You should be able to determine what your individual product or industry will require based on your needs. If you have any further questions about either option or what may work best for you, our experts can help. Open the chat at the bottom of the screen to connect with us!
If you’re looking for warehouse vs distribution center options, consider outsourcing your warehouse operations with R+L Global Logistics. We’ll handle your entire fulfillment, from the moment an order is made to when the customer receives their goods.
We are experts in this field, and we understand the pressures of dealing with warehousing and fulfillment. Let us take the burden off your shoulders, so you can get back to what’s really important: growing your business.