A distribution center is a building, structure or group of units used to store goods and merchandise that are to be delivered to various places on an as-needed basis. Large facilities are sometimes shared by several businesses to reduce each company’s overhead. A distribution center may ship goods to one or many destinations.
Massive retail chains traditionally own and operate distribution centers strategically located throughout the geographic areas they serve. Small independent retailers often hire third party distributors to store and ship their goods. The third party companies usually contract with a number of small companies to meet their specific distribution needs.
A center of this type generally warehouses goods that are distributed to wholesalers, retailers or directly to customers. It is often set up as a resource network that simultaneously serves these three groups. This method of storage and distribution is usually cost-effective because the business can use inventory and labor resources to provide products to multiple sources.
Other common names for a distribution center include package handling center, warehouse or fulfillment center. Some centers are referred to as cross-dock facilities or a bulk break center. Companies often refer to these facilities by the term DC, which is short for distribution center.
The chosen moniker frequently depends upon the specific nature of the business. Package handling centers often simply receive goods from one source and forward them to another. A fulfillment center commonly ships orders directly to customers who have ordered products through catalogs or online stores. Cross-dock facilities typically have no storage capacity and just transport goods from one shipping source to another, commonly from trucks to ships or trains or vice versa. A bulk break center customarily receives shipping containers or pallets of goods that are broken down for distribution to various sources.
Distribution centers ordinarily consist of three major sections. These areas regularly include a shipping dock, receiving dock and storage zone. Each of these warehouse regions may be broken down further into specialized sections for different types of goods. If a company handles perishable and non-perishable goods, it generally has areas equipped with air conditioning or refrigeration to safely store fresh products. Docks frequently have designated areas to handle goods for storage, transport or other disposition.
Regardless of the distribution center’s physical configuration, the efficiency of its processing operations dictates its profitability. Keeping labor costs low and quickly turning over inventory generally have a positive impact on the company’s profits. Competent order processing tends to build customer confidence and helps ensure the facility can effectively and regularly accommodate incoming shipments.