A distribution center stores and ships goods to various locations. Large facilities can be shared by multiple companies. They can be owned by chain stores or hired by small retailers. They usually have three main sections: shipping, receiving, and storage. Efficient processing is key to profitability.
A distribution center is a building, facility, or group of units used to store goods and merchandise that needs to be delivered to various locations as needed. Large facilities are sometimes shared by several companies to reduce overhead for each company. A distribution center can ship goods to one or more destinations.
Massive chain stores traditionally own and operate distribution centers strategically located in the geographic areas in which they operate. Small independent retailers often hire third-party distributors to store and ship their wares. Third-party companies usually contract with a number of small companies to meet their specific distribution needs.
Such a center generally stores goods which are distributed to wholesalers, retailers or directly to customers. It is often set up as a resource network that serves these three groups simultaneously. This storage and distribution method is usually cost effective because the business can use inventory and manpower resources to supply products to multiple sources.
Other common names for a distribution center include parcel handling center, warehouse, or fulfillment center. Some centers are referred to as cross-dock structures or collective parking centres. Companies often refer to these facilities as DC, which is short for distribution center.
The moniker you choose often depends on the specific nature of the business. Parcel handling centers often simply receive goods from one source and forward them to another. A fulfillment center ships orders directly to customers who have ordered products through catalogs or online stores. Cross-dock facilities typically have no storage capacity and only transport goods from one shipping source to another, commonly from trucks to ships or trains or vice versa. A wholesale distribution center routinely receives containers or pallets of goods which are broken down for distribution to various sources.
Distribution centers usually consist of three main sections. These areas regularly include a shipping dock, receiving dock, and storage area. Each of these warehouse areas can be further divided into specialized sections for different types of goods. If a business handles perishable and non-perishable goods, it typically has areas equipped with air conditioning or refrigeration to safely store fresh produce. Docks often have designated cargo handling areas for storage, transportation, or other arrangements.
Regardless of the physical configuration of the distribution center, the efficiency of its processing operations determines its profitability. Keeping labor costs low and inventory turning over quickly generally has a positive impact on the company’s bottom line. Proficient order processing tends to build customer confidence and ensure that your facility is able to effectively and smoothly handle incoming shipments.
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