Distribution Center

What is a Distribution Center? 

Distribution centers can be defined as specialized warehouses that offer fulfillment services for finished products along with acting as an inventory for businesses. They are usually handled by 3PL or third-party logistics partners that help businesses with the fulfillment and shipment processes. 

Significance of Distribution Center in E-commerce Logistics

A distribution center (DC) makes the flow of goods to and from the warehouse smoother while optimizing storage and distribution in e-commerce fulfillment. The following are ways in which these fulfillment centers aid in business logistics:

  • Distribution centers make the inward and outward flow of products within a supply chain smoother. 
  • Not only storing but the picking, packing, and shipment of products are also part of the functions of DCs. 
  • Managing a warehouse can be challenging for smaller businesses. Hiring a 3PL partner with distribution centers can reduce the overall costs of fulfillment throughout the supply chain. 

How A Distribution Center Works

A distribution center works in the following ways:

  1. Receiving and Storage of Inventory: Distribution centers receive and store inventory through deliveries, unloading of goods, and optimization of storage space for adequate use of the warehouse. 
  2. Picking and Packing: Distribution centers carry out picking either manually or through automated techniques. Subsequently, the goods are packed with the most appropriate packaging material.
  3. Replenishment: Inventory management and replenishment are essential duties of distribution centers. This is carried out by constantly monitoring stocks on hand and customer demand volume. 
  4. Returns: Distribution centers can also be used to manage returns effectively. In this case, the center would need to have appropriate facilities to process returned goods and restock them for reselling. 

Use Case with Distribution Center 

Consider a company XYZ has paired up with a reliable 3PL. Depending on seasonal demands, XYZ sends appropriate stocks of their goods to their 3PL partner’s distribution center. Subsequently, based on orders received, the 3PL partner picks, packs, and sends the goods for delivery. Thus, the order gets fulfilled. 

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