Distribution centres vs. warehouses – what’s the difference?

Distribution centres vs. warehouses – what’s the difference?

Warehouses, distribution centres…. They are all the same, right? Large spaces that have thousands of products stored inside them, with many works running around the place… Yeah, but not necessarily, as there are some key differences between distribution centres are warehouses. They are more different than you’d think.

distribution center

Let’s start with warehouses – what are they?

“A building for storing goods” (Wikipedia) – but that might be a bit too simple. So let’s delve deeper into it.

It goes without saying that in order to get the goods into the warehouse, the goods must be first received, put away into shelves and racking, counted and tracked. Then they must be pulled (or picked) in some fashion for shipment back out the docks that the goods came in on.

The definition offered by businessdictionary.com is that a warehouse is the “performance of administrative and physical functions associated with goods and materials. These functions include receipt, identification, verification, putting away, retrieval for issue, etc.”

Also, most notably is that a warehouse is not considered a facility in which the goods are transformed or changed in any way. Goods are just moved into, held in, or moved out of the building. This is the key aspect.

What about distribution centres – what are those?

Well, again, according to Wikipedia “A distribution centre for a set of products is a warehouse or other specialized building which is stocked with products (goods) to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution centre is a principal part, the order processing element, of the entire order fulfillment process. A distribution centre can also be called a warehouse, a DC, a fulfillment centre, a cross-dock facility, a bulk break centre, and a package handling centre.”

This is definitely a more comprehensive definition. It’s very important to remember that a distribution centre can be a warehouse, but a warehouse cannot be a distribution centre. It does much more than that which is associated with a warehouse.

The “principal” function of the Distribution Centre is stated to be that of “order processing” or “order fulfillment”.

That makes sense as, especially in retail, a distribution centre is the facility in which orders are received, goods are picked/pulled according to these orders, and the items are packaged for shipment to stores, end consumers, or other channels.

Additionally in logistics operations, a distribution centre may also involve some level of light assembly or processing. Testing can also be conducted within distribution centres, and repackaging prior to the fulfillment of orders.

So is a distribution centre really all that different from a warehouse?

Honestly, for many people the terms warehouse and distribution centre are pretty much synonymous.

In both cases goods are received, stored, managed, picked or pulled, and shipped. That is a fact.

If there is any distinction between the two terms it usually involves either the point that a distribution centre fulfills orders for individual end consumers and/or it involves some level of processing and transformation of goods plus the provision of extra services.

Many people also make the point that a warehouse really only involves, or allows for, long term storage of goods. There may or not be a customer for those goods and there is relatively little activity. I think this can be true but not exclusively. There are definitely warehouses that are much more active than this depiction would suggest.

Alternatively a distribution centre is perceived to involve the relatively more rapid turnover and movement of goods. And there is definitely a customer or channel for which those goods are destined.

So, to sum up

While many people continue to use the terms warehouse and distribution centre interchangeably, it can be argued that they have very unique characteristics despite their similarities.

To further complicate the discussion it is worth noting that these types of operations can also have different names. They can be fulfillment centres or even solution centres.

For many people, these operations are referred to by whatever name they have been called over extended periods of time regardless of the distinctions we have outlined here.

So yes, there are some major differences between them. The more you know, right?