Warehouse vs. Distribution Center: What’s the Difference?

Warehouse vs. Distribution Center: What's the Difference

You’ve heard the terms “warehouse” and “distribution center” before, but you may not know their differences. Often, the two are confused as the same, but there are notable differences between their purposes, operations and more. They are both large buildings that store products for business, but this is essentially the only thing they have in common.

We’re here to set the record straight. The following information will help you remember the duties and differences of warehouses and distribution centers and know which is appropriate for different business operations.

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What Is a Warehouse?

The term “warehouse” typically describes a large building where products are stored for a long period. This space is specifically meant for bulk storage of inventory until these products are ready to be used, sold or shipped. Warehouses contain shelves upon shelves of inventory items on pallets, and forklift operators organize and move these products daily.

The daily operations of warehouses are typically the same across many industries. Products are added to or removed from the building and moved to different areas to optimize storage when necessary.

Various businesses use warehouse spaces differently. Warehouse companies simply store and organize products for businesses that outsource warehousing to them. Warehouse companies often prefer businesses with large quantities of products or wholesale goods to maximize their revenue. However, it’s common for large companies to have their own warehouses to store products. For smaller or medium-sized businesses, it’s usually more economical to rent or lease warehouse space.

What Does a Distribution Center Do?

These centers complete multiple tasks and can be used for numerous processes, but their main purpose is to further and complete the supply chain. Enterprises use distribution centers for the temporary storage and distribution of goods. A distribution center is the last step in the supply chain before products go to the wholesaler or retailer. Essentially, these centers are a bridge between businesses and their customers. The distribution process works like this:

  1. A customer orders a product online and chooses to pick it up in-store.
  2. The supplier makes or has already made the product.
  3. The supplier sends the product to a nearby distribution center.
  4. The distribution center processes the customer’s order and ships it to the correct retail location.
  5. The customer picks up their product.

Distribution centers are essential parts of retail business supply chains. Because they store a large number of products, they often use various technologies and processes to increase the efficiency and accuracy of order processing and transportation.

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What Is a Fulfillment Center?

These spaces are also large and tend to store products, but that’s where the similarities to warehouses end. Unlike a warehouse, a fulfillment center stores products for short periods before these items ship to customers. They work with many different businesses — not just retail or wholesale companies.

Fulfillment centers are in charge of shipping products as quickly as possible to customers who have just placed an order. Therefore, the inventory in these centers quickly goes in and out. Products in fulfillment centers go directly to customers, whereas products in warehouses can sit for months and never interact with customers — just other businesses.

Products in fulfillment centers go directly to customers

It’s also common for people to confuse distribution and fulfillment centers. While the two both receive and ship products, their processes are very different. When someone mentions a fulfillment center, a well-known company that may come to mind is Amazon. The process of receiving orders from Amazon is as follows:

  1. A customer orders a product on the Amazon website.
  2. The product either ships to the fulfillment center or is already in stock.
  3. A fulfillment center employee finds the item that was ordered, records any necessary information and data from the order and packages it with a shipping label.
  4. The fulfillment center ships the package to the customer, who receives it at their home.

The fulfillment process differs greatly from both distribution center and warehouse processes and purposes. In many ways, fulfillment centers have changed and improved the way we receive products and has arguably surpassed distribution centers regarding the efficiency of distributing or shipping products.

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How Do Warehouses and Distribution Centers Improve Company Efficiency?

Warehouses, distribution centers and fulfillment centers have all become key to supply chain management for both retailers and e-commerce companies. If your business does not yet have or outsource either of these resources, you likely won’t be able to keep up with customer demand or competitors, causing you to lose loyal consumers. In today’s market with competitors like Amazon, faster shipping is not only desired but expected — many people receive their package within a day of ordering it.

Besides the necessity of keeping up with the times, owning or outsourcing company warehouses or distribution centers can greatly increase company efficiency. By utilizing these resources, you can relieve current employees of any out-of-scope job duties, stop using office and production space as storage closets, ensure your products ship in time and improve customer trust by following through on all orders.

If your business does not yet have a source for delivering products and you complete all your shipping in-house, using a distribution center could be a good option for you. Or, if your business is outgrowing your current storage space, you may want to explore warehouse storage options. You want to keep your customers happy and get products to them in a timely manner, and warehouses and distribution centers can help with that.

SourcePak offers warehouses and inventory managementdistribution centers and fulfillment centers to help expanding businesses that need to increase their capabilities. Anything you need to improve your company’s efficiency, you can get when you work with us.

There will be no more stressing over getting products out in time or trying to decide where to store seasonal inventory. Your e-commerce or retail business can stop worrying about storing an overflowing inventory or shipping everything according to schedule and focus on what it does best: making great products.

Contact SourcePak Today for Warehousing and Distribution Services

SourcePak’s distribution, fulfillment and warehouse facilities are designed specifically for retailers, meaning we’ll meet all your needs according to your preferences. Your customers will get exactly what they need on time, and your business will function as it should without being overwhelmed by too much work. If you’re ready to improve your product storage or distribution abilities, contact SourcePak today to learn more about what we do and how we’ll help your business.

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