New entrepreneurs often interchange a distribution center with a fulfillment center. These two may sound alike. But their supply chain management and logistics are different.
Unfortunately, you can not switch these two, as each term refers to something else. It’s best if you explore their functions and purposes. Understand distribution center vs. fulfillment center better. So you can choose the best option for your growing business.
A distribution center is a facility that receives and temporarily stores your products. Your goods stay there while waiting for them to be ordered and redistributed. It does not directly ship the products to customers. Instead, it sends from business-to-business (B2B) or fulfillment centers.
Distribution centers are a vital part of the distribution chain. It serves as a transport point where changes in the mode of trans-distribution happen.
For example, a shoe supplier sends products to distribution centers for retail locations. If an online shoe order comes in Walmart, you choose where to pick it up. The nearest distribution center sends it there to render your order.
Sometimes, products come from a distribution center going to a fulfillment center. For example, it occurs when an ordered product is available at the distribution center. Then, it passes to the fulfillment center so the customer will receive it.
Most businesses opt for a distribution center. It acts as a merchandise hub for grocery chains. Often, it’s close to markets for easy and cost-effective shipping. As a result, the stores can maintain the level of supplies.
A distribution center is essential to meet customers’ demands. If your product sales are high, you need frequent stock replenishment. Supermarkets avail of the service.
Advantages of a Distribution Center
A distribution center is beneficial due to the following reasons.
- Bulk delivery of goods for B2B
- Enough storage of large quantity inventory at once
- Long-term service at competitive costs
- Locates inventory closer to target markets
- Suitable for individually packed goods
Disadvantages of a Distribution Center
A distribution center has a downside, such as:
- Lesser frequency of order shipment due to bulk delivery
- Focus on palleted goods for delivery
- Longer shipping time
- Minimal customer interaction
- Offer fewer featured services
A distribution center is essential in the order process. However, management is pretty complicated as it stores a high volume of products. Do you want a more efficient service? Then, opt for a distribution center with automated features. Examples are warehouse management systems and transportation management systems.
A fulfillment center completes a customer order until it reaches the end customer. The fulfillment service starts by receiving and storing merchandise. It stays there while waiting to be sold. Then, it picks, packs, kits, and labels your products. Once it’s ready, it ships directly to your customer’s doorstep.
Business owners prefer this as it has a dedicated customer service team. In addition, it is responsible for managing the customer interface on your behalf. Also, you can save on overall shipping expenses. Fulfillment providers serve various clients simultaneously. As a result, you can focus more on strategizing your business goals.
Fulfillment centers focus on the quick delivery of goods to your prospective buyers. So they hold lesser inventory quantity. However, it means you must continuously replenish your stock. Also, you must ensure you sell your items to avoid penalty fees.
Advantages of a Fulfillment Center
The perks of a fulfillment center are:
- Delivers orders straight to customers’ doorsteps
- Location is near your customer for faster shipping time
- Trained personnel to receive and manage inventory
- Handles pick, pack, kit, and label products for you
- Feature a customer service and automation
- Assists returns and reverse logistic service
Disadvantages of a Fulfillment Center
The drawbacks of a fulfillment center are:
- Limitation on available storage space at a given time
- Short-term product storage
- The remaining inventory becomes expensive in time
- Lack of ability to ship in bulk
- More costly than a distribution center
Distribution Center Vs. Fulfillment Center: How To Choose
Understand the opportunities and possible losses with distribution center vs. fulfillment center. Then, it can identify the best logistics and supply chain for your business.
Distribution companies will only take large volumes of products. Then, it redistributes to small shipments. However, it will not ship your goods to buyers but send your inventory to different destinations. Examples are other warehouses and fulfillment companies.
On the other hand, fulfillment centers don’t ship your goods to other fulfillment operations. Instead, it highlights its expertise in committing speedy and accurate delivery to buyers.
Don’t be confused between the two. Both are centers but with different functionality. You can get the best service if you know your business sells.
Supply chains are vital for thriving businesses. So you must weigh which suits your business—distribution center vs. fulfillment center. First, identify if you plan to sell goods in bulk. Or do you prefer to have a hands-on customer experience? Whichever you choose, make sure it is what your business needs.
Outsourcing logistics helps you focus more on other vital aspects of your business. So you can maximize your venture’s strength. That’s why partnering up with a reliable and trusted fulfillment center is essential. Look for Red Stag Fulfillment.
The 3PL company has expertise in handling bulk, oversized, high-value, and fragile items. Also, it offers cost-effective and efficient fulfillment logistic services. As a result, it reduces spending on storing, packing, and shipping goods. So you won’t experience product mishandling. If you want to share a quality fulfillment service, check out the official website of Red Stag.