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What Is A Distribution Center

Warehouse vs Distribution Center

To anyone outside of the Logistics Business, comparing a warehouse vs distribution center can be confusing, or even pointless. They look alm...
Julia Hecht
October 21, 2019
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To anyone outside of the Logistics Business, comparing a warehouse vs distribution center can be confusing, or even pointless. They look almost identical from the outside, and both deal with receiving, storing, and moving products around or out of the building. Big businesses use both warehouses and distribution centers to store inventory, but apart from that, the two have very different services that they can offer, depending on the business’s individual needs. 

Comparing a warehouse vs distribution center in short: A warehouse is a large storage facility intended to store goods for a long period of time. A distribution center is a warehouse with complete fulfillment services and many other benefits. 

What is a Warehouse?

A regular warehouse is, to put it in the simplest possible terms, 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 the entire stock of an item after manufacture for shipment to a large-scale retailer. 
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Features Available in Warehouses 

Long-term warehouses are a no-nonsense storage option, and the services they offer make it easy to keep track of and control inventory. With that being said, warehouses offer no fulfillment options, making it strictly for storage.

Capacity

Warehouses, especially third-party warehouses, are generally very large. They must have enough space to account for all products, functions, and employees, as well as the possibility of multiple businesses stocking the warehouse with their goods. Warehouses are generally organized to optimize the given space and fit as much product within its walls as possible. After all, being able to store more product on less property is one of the easiest ways to reduce costs.

 However, that doesn’t necessarily mean that all warehouses must be large, multi-business productions. Some warehouses are smaller and much more private. Surely, if a small business owns its own warehouse and does not rent out space to other businesses, then that warehouse would likely be on a significantly smaller scale. The type of warehouse a business utilizes depends on their individual desires, policies, and needs.

Storage

The storage inside a warehouse is generally arranged on high shelves or racks. These shelves often reach all the way up to the high ceilings, and are tightly packed with boxes and pallets of products, to make use of the given space in the most efficient way possible. Warehouses are stocked by supply, meaning they often contain much of the overflow from production, so stores don’t have to face problems with overstocked items.

Warehouses also use what is known as a “mezzanine” to get more usable space. Mezzanines are elevated platforms that easily add another level to an area, and act almost like a second story. The structural steel mezzanines used in warehouses are semi-permanent or temporary, and can be moved around the warehouse with ease, depending on where it may be needed. The extra floor space can be a lifesaver during the months of high demand, like around Christmas time. 

Duration 

Warehouses are equipped to serve businesses long-term, so items that are stored in a traditional warehouse can be expected to stay there for quite some time. Business owners can rest easy knowing their products are in good hands for as long as they need, and that their products are easily accessible if they would want to pursue a new course of action with their supply.

Inventory Control

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 often keep a sort of digital map that lays out the floorplan of the space, and where everything is located within it. This makes it easy to find anything in the warehouse in moments, even when it is packed away somewhere.

Equipment

Warehouses don’t have much in terms of high-tech equipment, but they really don’t need to. They are stocked with high shelves, so forklifts and cranes are around every corner, to assist with moving large pallets of inventory to the upper shelves. There are also barcode scanners and computer databases to make sure all businesses can get a clear picture of the status of their wares.

Security

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 should also be around the premises 24 hours a day, so the stored goods are kept safe and secure. This is especially important for anyone dealing with the shipment of high-value items or volatile components, so they can ensure their cargo stays safe. 
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What is a Distribution Center?

In an age where technology is becoming integrated into every aspect of normal life, businesses need a way to keep up. Online shopping has created demand for accessibility and speedy deliveries—just look at Amazon Prime’s 2-day shipping! Businesses that want to keep up need to find ways of streamlining their supply chain management to get their products to their customers faster, like with automated processes and quick order fulfillment.

A distribution center is like a warehouse in the sense that it can store products, but that’s about where the similarities end. Instead of being just a place to store goods, a distribution center is a full production tailored to any business owner’s individual needs. Third-party logistics (3PL) distribution centers can be a one-stop fulfillment site, with 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!
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Features Available in Distribution Centers

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 warehoues.” 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. 

Storage

Items are stored in a similar fashion as with warehouses, but some services require moving, mixing, or even opening and picking from boxes. It may look less organized than neat rows of warehouse shelves, but state-of-the-art technology allows distribution center managers to know exactly where everything is located, to ensure a simple and easy fulfillment process.

Distribution centers are stocked by demand, so they take in enough stock to fulfill predicted orders, without a ton of excess. They also automatically replenish supplies if the stock gets low, which facilitates a smooth operation for business owners that are busy with other concerns.

Duration

Unless it doubles as a warehouse, distribution centers do not typically store products for longer than a month or so. Even if a distribution center has a warehouse component, products cannot be stored there without the expectation of being shipped out. In other words, items cannot just sit in a distribution center—they must be distributed. If an item in a third party distribution center has been sitting idle for too long because it does not sell well, the item may be taxed for an additional “overage fee,” or even forcibly ejected from the distribution center. Some distribution centers, like Amazon’s, will prohibit the offender from storing products with them in the future.

Items come into a distribution center to be sorted, shipped somewhere else, delivered to a customer, or processed in some way. Things are always moving very quickly inside a place like this, given its high-energy, multi-faceted operations. They cannot afford to work around products that don’t go anywhere. Utilizing a quick distribution like that the second after an order is placed is how businesses can offer expedited shipping, which also has a hand in improving customer satisfaction and recognition. 

Technology

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. Customers and business owners alike can watch their products from the moment they leave the manufacturing plant all the way up to the successful delivery to the final owner of the product. 

The Future of Distribution Center Technology

The not so distant future of distribution center technology promises big changes to the logistics industry in the next 15 years or so. An extremely small number of distribution centers are already using a completely automated order fulfillment process, and a small handful are well on their way. Unfortunately, it is not a reasonable option for most companies just yet. For the majority, the idea of complete automation is daunting because of the risk of investing in new technology, the immense overhead costs of buying all the machines, and the years-long wait on the return on investment (ROI). 

However, some cost-saving benefits do make the endeavor worthwhile, eventually. Because automation requires less human intervention, the warehouse would not need to be lit up all the time, and would only have lights for emergency purposes that would stay off most of the time. The machines do not require specific lighting or temperatures to function and can work non-stop indefinitely, as long as they are maintained. This skyrockets productivity and saves on energy costs. 

As more years pass, advancements in technology will continue to automate the process, with communication between robots to troubleshoot and fix problems, repair damages to the machines and the building, and more. 

Value-Added Services 

Distributions centers offer a variety of different services that, for the most part, require a certain degree of coordination and attention to detail that robots haven’t quite figured out. For the time being, these tasks are best left to humans. 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.

  • Replenishment: Distribution centers will keep track of the stock of an item, and automatically take the necessary steps to replenish the product, practically eliminating the phrase “out of stock” from online stores.
  • Pick and Pack: When an order is placed for many different items in the distribution center, they can be picked from their pallets and packed together in a single box for the customer, to reduce shipping costs.
  • Cross Docking: This process involves moving products directly from one truck to another, to reduce or eliminate storage times, and in turn reduce costs. 
  • Wave Picking: With this process, several orders are assigned together, which is called a “wave.” Workers then pick all the items from the shelves for the entire wave, bring them to the loading docks, and organize them further based on individual orders. This reduces the amount of traffic in the distribution center and saves time.
  • Break Bulk: This process involves taking a huge, long-distance shipment, and breaking it up into smaller ones to be distributed short distances. This eliminates the need for multiple small long-distance shipments, which saves money.
  • Kitting: Items that are sold separately but often bought together can be bundled and offered as a kit or set, such as a phone and a phone case, a notepad and a set of pens, or a bed frame and a mattress. This causes cheaper shipping costs and allows retailers to offer better deals to their customers for buying the kit.
  • Reverse Logistics: Reverse logistics is essentially a distribution center’s return policy. Products that are sent back are inspected and either resold or scrapped. Depending on the circumstances, they can also send the replacement product to the customer.

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Warehouse vs Distribution Center: Which is Best for Your Industry?

If long term storage is all you’re looking for, then you need not look any further than a traditional warehouse. 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. 

If what you need is a place to keep extra stock for your business or store overflow from a primary warehouse or distribution center, then you will likely need a warehouse. Your goods can be stored there safely until you can move them to a distribution center or retail location.

If, however, you run an online shop, you would want to utilize a distribution center. Your priority would be short term storage since goods would not stay long before being shipped out to your eagerly awaiting customers. Distribution centers offer the best solution to fulfillment issues or delays and can ship your product out the moment an order is processed. 

If the product you are trying to ship or store is perishable, then you will also need to go with a distribution center. Things like food, plants and flowers, vaccines, hatching eggs, and frozen products cannot be stored for long periods of time, and need to get to their final destination before they spoil. Obviously, you cannot have products like this sitting around in a warehouse. 

You should be able to determine what your individual product or industry will require based on what you want to achieve. 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!

Outsource with R+L Global Logistics

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.
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