Many shipping professionals may use the terms warehouse and fulfillment center interchangeably, but these two methods of storage are not the same. The logistics of running a warehouse tend to be much simpler than running a fulfillment center, mainly because a fulfillment center is much more involved in the order fulfillment process.
On the outside, both fulfillment centers and warehouses may look similar, but their internal processes couldn’t be more different. If you are looking into warehouse space versus a distribution center, and want to know the difference between the two, here are some key details.
Warehouses
In the past, the maxim was to have the maximum quantity of products ready to go at all times. Slow information flow necessitated a vast amount of goods available to go. Advances in modern technology and communication systems have changed this.
Modern supply chains can effectively predict product demand, so the new maxim is to have the correct amount of goods available at any given time. A warehouse stores products for an extended period, much longer than a fulfillment center does.
Warehouses are generally in-house tools, used by a company to pre-build inventory to anticipate product demand, so they never meet customers.
With the advances of ecommerce businesses and ecommerce fulfillment, warehouses needed to evolve to be more static and to ensure delivery in a timely manner. This need paved the way for fulfillment centers.
Fulfillment Centers
Also known as distribution centers, these storage and order fulfillment centers differ from warehouses in that they don’t just store the goods from shipping orders. Fulfillment centers are also in charge of fulfilling orders from ecommerce orders, mixing products, packaging, and more.
The flow velocity of distribution centers is higher than in a warehouse, and for a good reason. Mostly, customer orders ship from a fulfillment center, not a warehouse. The former can handle the complex logistics involved in meeting customers’ orders, evaluating shipping costs, and otherwise managing store inventory.
Another significant difference between the two types of storage facilities is the technology used to fulfill orders and move products. In a warehouse, the goal is efficient storage of a set amount of goods in a defined space. In a fulfillment center, the technology needs to keep up with the lightning-fast order from ecommerce stores.
The warehouse management system needs to be top of the line to handle order picking and on-the-ground demands of a quick turnover. Modern warehouse management systems include robotics, drones, and more traditional physical technology.
Warehouse vs. Fulfillment Center
The type of order fulfillment center you need depends directly on your company. Warehouses are more suited for a company that plans on storing goods long-term and does not need to have products shipped out at a moment’s notice.
Conversely, fulfillment centers handle quick intakes and outputs of goods. They need to have the required infrastructure for a multiplex order fulfillment process.
Although both warehouses and distribution centers can be temperature-controlled to preserve the longevity of the stored goods, companies like grocery chains mainly use distribution centers since their products do not last.
Warehouses manage eight or less inventory turns in a year, meaning when a stock is shipped in and out, whereas a distribution center sees more than eight inventory turns a year.
Warehouses and fulfillment centers can also work together in the supply chain. Often, when ecommerce orders come in, goods will be shipped out of the long-term storage in the warehouse to a distribution center where they can be packaged and readied to send to a customer or a brick and mortar establishment.
Final Thoughts
If your company deals with ecommerce goods, you need a place to put your products. The decision between a warehouse and a distribution center depends mainly on what kind of goods you deal in, and how long they will remain in the space.
Warehouses are designed for long-term storage and are optimized for efficient packing in minimal space. Distribution centers are designed for quick intake and output, so the turn-around of goods must be fast and seamless.
At Asiana USA, we manage your freight supply line and shipping process, from drayage costs to customs to storing and fulfillment. Asiana USA is highly professional with a staff of shipping experts to handle your shipping demands. Contact Asiana today at Asiana.com or call us at 855-500-1808 for an estimate.
