How Distribution Centers Work

Once a business has outgrown its storage space or lacks the time necessary to oversee important processes involved in distributing products, it’s time to take the next step. In order to grow and expand, there are many logistics and warehouse operations to consider when distributing physical inventory including inventory management, pick and packaging, trucks and transportation, boxes, labels, supply chain management, fulfillment, order processing, quality control, material handling, increasing productivity and warehouse management.

An option worth considering for managing your end product is a warehouse and distribution center. The success of a company’s warehousing and distribution services is crucial to its ability to delight and retain customers.

A distribution center for a group of products is a warehouse stocked with products or goods for distribution by retailers, wholesalers or directly to consumers in e-commerce. A warehouse distribution center is the logistical hub that connects you and your customers. A distribution center will pick up your products directly from the manufacturer and ship them to a location that can house your inventory. The product remains in the warehouse, protected, organized and ready to be pulled into the distribution network.

Role of Distribution Centers

Ultimately, distribution centers act to streamline operations and improve the customer experience. Distribution centers simplify the warehousing and logistics process by using a central hub that consolidates orders in a highly efficient manner.

Many distribution centers have found that customers benefit from cross-docking, where incoming goods are immediately relocated to a separate outgoing service dock. This eliminates the need for longer-term storage and speeds up the supply chain. The initiation of the delivery process within seconds of an order being placed is an excellent example of how companies can offer accelerated shipping by using a distribution center.

Distribution Center Team Members

In the modern distribution center, warehouse specialists are logistics experts who are able to accept incoming shipments, identify products and organize them so that they can be picked up quickly and easily. The warehouse worker inspects the articles, checks them for damage and prepares them for shipment to their destination after collecting the customer’s order. There are also other tasks and expertise crucial for executing successful distribution operations. It’s important that warehouse managers and team members are skilled, motivated, engaged and supported within a culture of winning.

Warehouse Operations and Management

With so many factors affecting warehouse management, small details can be overlooked and ultimately cause unforeseen problems and bottlenecks in the supply chain. The difference between an efficient warehouse and one that is merely “fast” is crucial, whether in terms of safety, inventory turnover or time to market.

In order to meet customer requirements, a warehouse needs to be properly managed. Within the scope of warehouse management are various other services that are often bundled. These warehouse operations include quality assurance, order processing capabilities, order picking, cross-docking, inventory management, data collection and analysis, kitting and packaging.

Fulfillment and Logistics

A distribution center often handles the fulfillment and logistics processes required to deliver a seller’s product to its customers. Once a customer’s order is completed, the stock is stored in the fulfillment center for a few days or weeks. After purchase, it is taken off the shelves, packed and prepared for shipment. If a customer purchases from an e-commerce store, the order is processed in the fulfillment center.

Employees are alerted to retrieve the ordered products, pack them, label the packages and get the order ready for dispatch. Information tracking is pushed back to the e-commerce platform and shared with the customer so that they know their order is on the way.

Technology and Automation

Modern distribution centers are equipped with technologies to streamline the warehousing and fulfillment processes. The operation of a distribution center has become almost completely paperless through cloud computing, mobile devices and other advanced systems.

Automation allows for more timely and accurate data collection to help organizations make smarter supply chain decisions. By reducing paper files, companies save storage space and eliminate steps from many storage and fulfillment processes. Instead of workers having to write down or type long product or shipment identification numbers, most warehouses and distribution centers have RF barcode and RFID systems that accelerate processes even while eliminating human error.

Distribution Centers Enable Companies to Improve Profitability

A distribution center will pack, label and ship each customer’s order so that you can focus on meeting your growth and sales objectives. The greatest benefit of utilizing a distribution center is that it allows your company to scale up and increase profits. At NewStream Enterprises, LLC, we’re not only a leader in distribution, we also can handle any or every aspect of managing your supply chain.

Read a case study on how we helped an original equipment manufacturer (OEM) double their revenue by growing the aftermarket side of the business, as well as improving lead times.