In retail, ecommerce, and other niches, companies are increasingly complicated. Many different departments and business operations must work together seamlessly. That’s the only way to achieve true collaboration at work and the productivity which spurs. 

To work together efficiently, each branch of your firm must understand what the others do. Does your business, for instance, have a distribution center? If so, do you genuinely grasp what that is and how it helps the company operate? If not, you’ll want to read on. 

 Distribution Center: A Definition

A distribution center is a specialized hub that deals with the storage and shipping of goods. It’s where the distribution of stock gets managed and handled for an organisation. At a distribution center, inventory gets stored, order fulfillment dealt with, and shipping managed. Depending on a firm’s return policy, the center may also get involved with reverse logistics

Most distribution centers have a loading dock, storage area, and shipping section. Inventory moves through a center at speed, and efficiency is always top of mind. Sometimes, too, other processes get dealt with in the same place. Those can include order fulfillment, cross-docking, and more. 

How is a Distribution Center Different to a Warehouse?

You may have read this far and thought, ‘aren’t you describing a warehouse?’ It’s a fair question. Sometimes people do use ‘distribution center’ and ‘warehouse’ as interchangeable terms. They shouldn’t, however.

There are many ways in which a distribution center differs from a warehouse:  

1. Time of storage & agility.

Warehouses are permanent or semi-permanent places to store inventory. They are, as such, static and passive elements of business operations. Distribution centers are very different. The best of them are dynamic and agile parts of any company.

Stock moves through the most efficient distribution centers swiftly. The flow of goods is far more rapid. If wares stay in a distribution center for a long time, it’s a sign that something has gone wrong with the supply chain.   

2. Customer-centric.

Distribution centers are also customer-centric. Or at least they should be. A warehouse is only concerned with storing goods effectively. A distribution center’s principal aim is to meet customer expectations.

As such, operations at a distribution center get impacted by many factors. Those include a firm’s sales territory plan, changing customer demands, order volumes, and more. This is another reason why these centers must remain agile. They need to adapt to day-to-day changes. 

3. External & internal supply.

Some brands move their goods through a traditional distribution channel. That means they may provide wares to a wholesaler, and it’s that firm which supplies retailers. Other companies sell directly to consumers. Many combine the two. 

Shipments to consumers and other firms in a supply chain can come from a distribution center. Often, a warehouse will only serve the latter. It doesn’t have the organisation or infrastructure also to handle consumer orders.   

4. More complex operations.

So, a distribution center’s responsibilities are more nuanced. That means their operations must also be more complex. Processes like picking and packing orders, cross-docking, and more all get handled at the center.

In some cases, too, a distribution center will play a part in product assembly. The building may receive delivery of elements of the product. They'll then put them together, pack them for particular orders, and ship them.  

5. Higher level of technology.

Due to the greater complexity of operations, distribution centers also often have more tech — certainly more than a traditional warehouse. At most modern companies, supply chain operations rely on many different tech solutions.

A distribution center, for instance, is likely to possess the following:

  • A cloud PBX system to connect workers with all other departments of the organisation.
  • Comprehensive inventory management software. 
  • AI-enable robots for locating and moving stock efficiently. 

Conclusion

The distribution center is the beating heart of many modern organisations. Especially those in the ecommerce niche, as they rely on an efficient supply chain to succeed. These centers leverage technology and complex processes to make firms tick. 

Far more than a glorified warehouse, a distribution center ensures goods reach the right places at the right time. That’s whether the destination is a retail store, a wholesaler, or a customer’s doorstep. Such timely dispatch and delivery is fundamental to the success of any retail business.   

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