How many times have you heard your place of work referred to as “the warehouse”? Nothing against warehouses, distribution centers, but an order fulfillment operation is not the same thing.
The idea of businesses sending merchandise directly to their customers isn’t new, but it has changed drastically over the last ten years. Before 1997, most costumers didn’t mind if it was going to take days or even weeks to receive their order. Today, customers are disappointed if we do not deliver their order within 48rhs.
So what’s the difference?
Warehouse – is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They usually have loading docks to load and unload goods from trucks. Sometimes warehouses load and unload goods directly from railways, airports, or seaports. They often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.
Distribution center (DC) – for a set of products is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products (goods) to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution center is a principal part, the order processing element, of the entire order fulfillment process. Distribution centers are usually thought of as being demand driven.
Distribution Center is a widely used term. The definition above even uses the phrase “directly to consumers” and “order fulfillment process.” It’s true that many DC’s have these operations, but that doesn’t mean they’re designed to process this work efficiently. Most DC’s started fulfilling DTC orders after realizing that the e-commerce wasn’t going away.
Fulfillment Center (FC) – A specialized building that is focused on order fulfillment or product fulfillment. In an FC, a company fulfills their obligation to send a product to the person that ordered that product. The term “Fulfillment” refers to the services provided by a company that offers to store, receive, package, and then ship the ordered item to the end consumer.
You can see that a fulfillment center’s core competency is direct to consumer operations.
All DC and FC operations are the same, correct? Wrong!
If we look at what makes up each operation, you’ll see they’re very different.
An order fulfillment operation has needs specific to those of the end consumer. Wal-Mart or Target distribution centers send the product directly to their stores. A direct to consumer operation sends the product directly to the customer.
Now ask yourself, where do you work?