Warehouse and distribution center: characteristics, purposes and differences


In recent years you will surely have heard of warehouses and distribution centers. In most cases, however, you will probably have limited yourself to thinking that they are synonyms or that, in any case, the differences between the two will not be that many.

In reality, however, you will be surprised to know that the warehouse and distribution center, although they start from a similar premise, i.e. the management of goods and their delivery, follow different production logics.

In describing the differences we could start from the concept that, while the warehouse is based on the idea of storing and conserving as many goods as possible dividing them by type, the distribution center follows an inverse logic, that is, organizing the goods but ensuring that they remain in the center for as little time as possible.

In fact, the distribution center has the function of receiving goods from suppliers (or other centers) and delivering them to the recipient in the shortest possible time. From this function a series of procedures and techniques have been derived which attempt to maximize the efficiency of the centers, both in terms of organization and timing.

In this regard, it seems almost obvious to me to point out that technology is one of the key elements of the sector, since it allows loading and unloading operations as well as sorting of goods to be carried out in absolutely less time than if all this were done manually by operators.

The distribution center is fast and dynamic

As was said previously, while the warehouse is based on a concept of "staticity" of the goods, the distribution center aims to be only a transit point for the goods, which are quickly sorted and loaded onto the trucks that take care of the delivery.

The life of a distribution center and its evolution is therefore one continuous research into procedures and technologies that allow us to speed up each step of the production process and eliminate the possibility of error.

Upon closer inspection, the transition from the logic of warehouses to that of distribution centers is a consequence of the change in previous market dynamics.

While in the past the customer went to the shops and purchased what was on the shelves, now the customer browses the websites and selects what he needs. The offer of websites, however, is necessarily much broader than that of a physical store. It follows that online businesses rely on distribution centers for order management which, once the details of the order have been received, must be ready and quick to identify the product on their shelves, package it and load it onto a courier who have it delivered to the customer's doorstep.

However, the way of working in the warehouses was different. These, in fact, mainly dealt with the supply of shops and supermarkets and not, however, directly with the customer. It followed, therefore, that first of all the orders contained many more products - while the customer orders a bar of soap, the supermarket orders a thousand - but on the other hand the delivery times did not need to be incredibly punctual, given that the shops realize in advance of goods that are about to run out.

To summarize the concept: different market customer needs have resulted in different functions and structures of warehouses and distribution centers.

Warehouse and distribution center respond to different needs

As is evident, therefore, warehouse and distribution center respond to different market needs.

This difference has certainly widened due to the pandemic. The number of orders on e-commerce sites has in fact suddenly increased, with the consequence that the number of orders that the distribution centers have had to manage has undergone a rapid surge. What resulted was also an increasingly frenetic search for technologies and procedures that would guarantee a lower percentage of errors and, at the same time, greater speed in managing orders.

The different technologies used

If after reading this entire article, I let you into an establishment without revealing whether it is a warehouse or a distribution center, I assure you that you would be able to give me the correct answer immediately.

This is because in the distribution center you will find tools and equipment that the warehouse does not use, since it does not need them.

In a distribution center you are likely to be faced with automated centers, connected forklifts, robotics-based systems, artificial intelligence and AGVs (automatically guided vehicles).

The great deal of competition in the sector and the constant innovations that the evolution of electronic commerce is bringing about has in fact also had repercussions on the structure of distribution centres, which compete to possess the most innovative technologies that allow them to guarantee the most efficient service. possible.

Even if it is not visible at first sight, it must be said that distribution centres, unlike warehouses, use technologies capable of automating the creation of an inventory of orders and products. Among the technologies most frequently present in distribution centers we find bar codes and radio frequency identification systems, which are able to reduce the possibility of human errors in the tracking procedure to almost zero. On the other hand, all those operations that can be automated represent one less task for employees to manage.

Furthermore, in this way it is possible to collect data more precisely and above all in real time. Through other automated systems this data is managed to make decisions through the use of artificial intelligence.

An alternative procedure

For completeness, I point out an interesting aspect of distribution centers, which is that they sometimes adopt a process called “cross-docking”. This particular procedure consists in transferring the products directly from one means of transport to another, thus avoiding having the product transit through the distribution center. In this case the sorting of the items takes place more quickly in a special area and then loading them onto the vehicle that will take care of the delivery.

Cross-docking, although it certainly involves relatively high implementation costs, allows them to be amortized through an increase in productivity.

The warehouses have not lost their usefulness

Based on what has been said, you might be led to think of warehouses as something obsolete, which is about to disappear. The truth is that, although distribution centers are carving out an important slice of the market, there remain functions that only warehouses can satisfy and which, therefore, guarantee both its survival and usefulness.

An example is that of the management of "seasonal peaks", that is, those moments of the year in which the demand for certain products increases dramatically and then disappears for as many months. In these cases, warehouses are essential. Companies can in fact order in advance the products they believe will reach a peak in sales shortly, and store them in warehouses.

The latter can guarantee its conservation for a longer period than distribution centers, which, as mentioned, focus on dynamism and speed. The owner of a distribution center would never want the goods to be stored at his factory for too many days, as this would lead to a slowdown in the management of other orders and therefore in productivity itself.

If you are a warehouse lover, then, you can also do without worrying. There remains a nice market share for them too.

With this article I hope to have provided you with a complete overview of what warehouses and distribution centers are, what market needs they respond to and the differences between the two. Now you will be able to choose independently which of the two types best suits the needs of your business. Of course, don't forget that the two are not mutually exclusive. A business may well rely on a warehouse for certain needs and a distribution center for other needs. The choice is always up to the entrepreneur, who will certainly be able to identify how to make his company as productive as possible.

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