While searching for ways to streamline your supply chain experience, you’ll encounter concepts like “fulfillment center” (or “FC”) and “warehouse” as logistics solutions, but you don’t know the difference between them.
You might think that they’re different like apples and oranges, but it’s a bit more complicated than that. Let’s make it simple:
Fulfillment Center vs. Warehouse
FC is a type of warehouse, but a warehouse is not an FC. In fact, there are sundry types of warehouses like public and private, government, co-op, consolidated, bonded, and smart warehouses. You could say that the fulfillment center falls under the “smart warehouse” category.
Despite all these options, most warehouses share similar traits. Both warehouse and FC are inclusive under the third-party logistics (3PL) umbrella concept, which is all about outsourcing, storing, and distribution services. Let’s compare the two:
You need a place to store goods for a period of time before distribution. It is a physical space in a particular location. When you’re dealing with bulk objects, do business wholesale, or need to perform B2B orders, warehouses are integral to the whole supply chain.
As heavy objects are stacked and moved around, forklifts and conveyor belts are used to lift and move them. There’s CCTV to make sure nothing goes past the watchful eye, and there are high-tech systems to keep unwanted entities out, such as infrared or magnetic sensors and detectors. These facilities are for static and long-term storage, say if you manage to acquire a huge volume of items that you got dirt cheap, and you need a place to keep it because your home garage just won’t do, or you’re not looking to dispose of all items so soon.
Warehouses are always huge, some are more than a million in square feet! And they can store anything from food, clothes, gadgetry, toys to cosmetics. Typically, they will have four major sections: the receiving, storage, picking, and dispatch areas. Items go from one area to another in the process, so the warehouse must be built in a certain way so everything flows smoothly. It also has an office for management, a canteen for meals and changing rooms for the workers.
The Fulfilment Center
FC is set at a location and has storage facilities, plus they have a multiplicity of automated services that go beyond just storing goods. They make sure that the whole process of storing, distribution, and delivery will lead to end-user satisfaction. They service both b2b and b2c orders.
To illustrate, when you sign up to an FC, they will store your goods, pick the right ones for each customer, pack them nicely, and get them to the buyer on time. Many such facilities are so high-tech that they have robotics drive units that aid the pickers and do the stowing as well. Items are always checked into the system. FCs have “kitting” services that bundle items together for better saleability and delivery. Millions of products are tagged on a conveyor belt for labeling and proper direction. FCs have their own delivery fleets and carrier partners. But storage for the most part is short-term and temporary, unlike the warehouse where goods can sit for longer periods.
The FC is built on the premise that you, the seller, will be able to master supply chain challenges by disposing of varied items at a very quick turnaround time, done with uncanny accuracy thanks to digital systems, logistics, machinery, and software to make it happen. The extremely busy environment of an FC is a good sign that shows such a facility is capable of servicing multiple merchants simultaneously, with all having happy customers at the end of the day.
Which one is better?
You’d think that the smart and tech-savvy fulfillment center might be superior to a typical warehouse. The truth is, each 3PL service has its pros and cons, and the only thing that can make it the best choice is how well it fits your needs at the current phase your business is in.