What is Warehouse Distribution?

Warehouse distribution is vital to the supply chain where the product is stored between its entrance from its origin and distribution to a customer or retail business. Distribution warehousing is more than just storing items.

Regardless of the business size, the warehouse and distribution can also engage several other services which prepare the products for delivery. From packaging and labelling products to tracking and shipping, an established warehousing company can manage various facets of the supply chain from the warehouse itself.

In other words, a distribution warehouse is a unique warehouse designed to serve goods approaching the supply chain’s end. After the products are manufactured and ready to distribute to retailers, they are temporarily stored at the distribution warehouse.

Usually, distribution warehouses are associated with particular distributors for specific products. For example, a smartphone manufacturer may use services from a distributor who repairs computers and smartphone equipment. The corresponding distributor will use their warehouse to store and ship those smartphones to retail outlets for selling. Apart from holding and shipping products, the distributor may provide training or support for those smartphones. But in that case, the cost to the manufacturer rises, and the profit margin reduces.

Understanding Warehouse Distribution in E-commerce

Importance of Warehouse Distribution

The warehouse and distribution business environment is quite demanding and features cutthroat competition without any odds of errors. Warehouse distribution, therefore, holds great significance for the following reasons:

  • Provides customers with exceptional services in transporting and storing their goods in a way that can improve the organisation’s relationship.
  • It helps to attend to customer complaints and feedback promptly.
  • It aims to reduce the distribution and warehousing expenses to boost the profitability of the business. To achieve this, it implements cutting-edge technology and uses the most suitable transportation means in distribution processes that minimize goods’ damage and resource consumption.
  • The warehouse distribution facilitates constant improvement via service quality evaluation that recognizes the areas requiring improvements. Also, it decreases costs, improves the quality of customer service, and excludes inefficiencies.
  • It maximises the use of staff and warehouse equipment to ascertain that the available staff and equipment are effectively used to avoid spending on hiring more staff.
  • The incompetence in delivering goods to specific destinations would incur a business with extra delivery expenses to accomplish two things. They are -to bring back the inappropriate goods and deliver the correct ones. Delays can spoil the goods, and targeted recipients might not accept and pay for their delivery. However, distribution warehouse ensures successful delivery of goods without any damage to its targeted customers.
  • The use of appropriate warehousing and distribution can stabilize the prices of goods. The adequate supply of goods will ensure their prices will not rise, and the customers’ demands will always be fulfilled.
Understanding Warehouse Distribution in E-commerce

Functions of a Warehouse Distribution

Let’s go through various functions of warehouse distribution.

Storage:

It is the fundamental function of warehousing. Excess commodities that are not immediately required can be stored within warehouses. They can be subsequently distributed as and when required by customers.

Price stabilization:

All distribution warehouses perform a significant role in stabilizing the price. It achieves this with the generation of time utility. It stabilizes the price by reducing the prices of goods when the supply is plentiful and raising the prices during a lull.

Risk tolerance:

When goods are stored in other places, they may be exposed to theft, expiration, damage, fire, and other risks. However, warehouses are specially built to minimize those risks.

A warehouse keeper is responsible for ensuring goods’ safety against various risks. In case of any damage or loss to goods, the warehouse keeper shall be accountable to the owner of the goods.

Financing:

Financing is one of the vital functions of warehouse distribution. Loans can be raised from the warehouse keeper against the goods stored by the owner. Here, the goods act as security for the warehouse keeper. Likewise, banks and other financial units also raise loans against warehouse receipts. Consequently, distribution warehousing is a source of finance for business owners to fulfil operations.

Categorizing and packing:

Nowadays, many distribution warehouses provide facilities like packing, processing, and categorizing goods. They pack goods in convenient sizes according to the owner’s commands.

Understanding Warehouse Distribution in E-commerce

Differences Between Warehouse Vs. Distribution Center

The following table elaborates on the difference between distribution center vs warehouse. After going through these differences, you can determine which one best suits your products’ or industry’s needs.

Understanding Warehouse Distribution in E-commerce
Warehouse Distribution Center
If you are looking for long-term storage, a warehouse is recommended.
To run an online shop, you must use a distribution center.
A warehouse is simply used for storing products.
Apart from storing products, a distribution center provides value-added services like order fulfillment, product mixing, packaging, cross-docking, etc.
Whether your goods are retailer returns, seasonal home decor, or other commodities, a warehouse keeps them safe as long as you want them stored.
A distribution center stores your goods for a short period until they need to be shipped out to your customers.
When you want to move the products in the supply chain, warehouses can locate and ship your order with high efficiency. It also helps if you require them back or want to relocate them.
Distribution centers provide the best solution to delays or fulfillment issues. It can immediately ship your products once an order is processed.
A warehouse stores products for relatively longer periods than a distribution center.
A distribution center stores products for comparatively shorter periods than a warehouse. Hence, the flow velocity via the distribution center is more significant than that via a warehouse.
The critical role of a warehouse is to efficiently and safely store products.
A customer-focused distribution centre works as the bridge between a supplier and its customers. Its key objective is to fulfill customer requirements efficiently.
Generally, a warehouse doesn’t serve external customers.
Generally, retail and warehouse orders are shipped out from a distribution center. It does serve external customers.
The operations at a warehouse are relatively more straightforward than that at a warehouse.
The processes at a distribution center are much more complex than those at a warehouse. Hence, the distribution centers are implemented with the latest technology for transportation management, warehouse management, order processing, etc.

Distribution Warehouse Vs. Public Warehouse

The choice of one among these storage facilities depends on cost, deadline, product type, business model, and inbound and outbound shipping requirements.

Contrasting a distribution warehouse, the public warehouse usually provides fewer facilities; however, it comes at a lower price.

In all public warehouses, options like pick and pack, temperature control, and an excellent inventory management system might not be available in all the public warehouses. A few public warehouses provide one or more of these auxiliary services.

Public warehouse options provide high affordability, versatility, and short-term agreements that may not be available in a distribution warehouse.

Understanding Warehouse Distribution in E-commerce

Warehouse Distribution Model

A warehouse distribution model is a method companies employ to deliver products from the origin to end customers. A typical model involves a minimum of three parties -the manufacturer of goods, the warehouse or distributor, and the retail store (denotes the final selling point).

This model keeps distribution or shipping costs at a minimum for the company to obtain maximum profitability. The distributor or wholesaler tries to convince the manufacturer to pay high prices for moving goods to retailers. The reason is that the wholesaler or distributor is an intermediary that desires profits for its activities.

If a short warehouse distribution model is used, it usually costs less and leads to shorter downtime whenever a retailer suffers from stock out. For instance, those manufacturers producing an item in high demand should have implemented a distribution model that can frequently supply to maximize sales.

A warehouse distribution also suggests that paying a premium price for fulfilling demanding distribution services might not be an issue. The reason is profits earned from abundant sales of in-demand products counterbalance the costs for distribution.

This model allows a large company to set up its distribution service by creating a distributorship that can transport goods to retailers. In this case, this model can let a company frequently interact with customers because of the short supply chain.

Understanding Warehouse Distribution in E-commerce

What is Warehouse Distribution Experience?

The warehouse distribution experience involves asking a few questions.

They are –
– ‘Are adequate products available?’,
– ‘How can we tactically design the warehouse layout?’ and
– ‘How to enhance the distribution efficiency–either by merging shipments or merging the warehouse?’

The answers to these questions give you an idea of the warehouse distribution experience. The warehouse is the common factor in all these questions. Answering these questions helps you understand how the distribution warehouse functions most efficiently. Also, the location of concealed gaps can be fixed to ensure the smooth functioning of warehouse distribution.

Generally, supply chain management is considered the perfect career field to elevate your warehouse distribution experience to the next level. The distribution supply chain managers are essentially the organisational experts responsible for moving products from the supplier to the consumer.

Your top-of-the-line experience in a warehouse provides you with a sole perspective about fixes that can be theoretically possible but fails practically. Having an introductory knowledge of what’s viable or not can be beneficial.

Primarily when you work in a supply chain management role, a solid understanding of warehouse distribution can prove greatly helpful. In this way, you can better explain the process of running a supply chain to your juniors and colleagues. With this experience, you can work more profoundly. Also, it helps you make intelligent decisions and determine how to best assist them in accomplishing their goals.

Conclusion

Warehouse distribution guarantees safe delivery of products from the point of origin to customers. They guarantee high distribution efficiency and improve the quality of customer service. An effective distribution warehouse offers smooth product movement, inventory management, and risk mitigation.

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FAQs

The six core areas in a warehouse distribution center are receiving, putaway, storage, picking, packing, and shipping. Enhancing these areas will help you streamline your entire warehouse operation. Also, it helps reduce errors & costs and obtain higher profit margins.

Seven types of warehouses are briefly described here,

i. Private Warehouses –They are storehouses owned by manufacturers, distributors, or wholesalers that are not open to the general public.
ii. Public Warehouses –They provide storage facilities at a specific price to the general public.
iii. Bonded Warehouses –They are certified by the government to accept and store imported goods until customs duties are paid.
iv. Smart Warehouse –They automate the administration and fulfillment process.
v. Cold storage warehouses –They enable prescription and non-prescription medications, plants, fresh foods, personal care products, and more to have a prolonged shelf life.
vi. Pick, Pack & Ship Warehouse –They receive orders from either an online shop or an onsite business store, followed by the pack, pick, and ship.
vii. Distribution Centers –They allow rapid transportation of huge volumes of products in a short period.

  • A distribution warehouse aims for hassle-free inbound and outbound product movements.
  • It uses a warehouse storage system for easy tracking, inventory management, and finding products in the warehouse.
  • An efficient warehouse distribution uses a warehouse storage system for smooth product movement and a digital tracking system for product security.
  • It reduces the risk of your products’ loss, damage, and burglary.
  • It is tailored for your products and can be personalized to your particular needs.
  • Many distribution warehouses use cutting-edge technology like a tracking system and RFID labels to confirm that your goods are always inventoried and traced.

Logistics warehouse distribution refers to storing goods for sale or distribution cost-effectively and efficiently.

It works on key aspects like storage, distribution, and transportation.

Advantages of using a logistics warehouse distribution to businesses:

  • Improved efficiency
  • Better inventory management
  • On-time delivery
  • Reduced operational costs
  • Excellent customer satisfaction

The processes in a distribution center are designed to rapidly and efficiently process orders by picking, packing, and shipping the products to your customers. Here are its main tasks:

1. Acquiring and storing inventory -This task refers to delivering, unpacking, and optimizing storage space in single or multiple distribution center sites.

2. Picking and packing -It generates a more efficient workflow by enhancing order accuracy and speed.

3. Restocking -It ensures adequate inventory is always stored and all set to be picked and packed when the order is placed.

4. Returns management-It substantially improves customer satisfaction and decreases logistics costs.

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