Often times when speaking with a client about their real estate needs, they describe their operations as either a Fulfillment center or Distribution center. The other day I was meeting with a client that is starting up a new venture in the E-commerce world. He stated they needed a Distribution center. After 20 minuets hearing about their what types of product they will be selling, where their customer base is primary located, what their delivery goals are, etc, I stated "Ohh, so you need a Fulfillment Center not a DC." He said, yes, a Fulfillment Center.....the baffled look on his face was telling me he did not know the difference. So I went on to explain to him what the difference was:
A Fulfillment Centers (FC) usually relies on a third party or 3PL or internally to handle the storage, packaging and shipping of the companies product to be sent directly to the consumer. Typically a FC is a warehouse that stores all of the products from a web site that are to be individually picked and packaged to be sent out to the consumer. For Example, A company such as Newegg.com will have thousands of SKU's in their FC. Jack places an order for a Keyboard and a mouse. The workers will find those locations in the FC, box them and ship them to Jack. The order has been Fulfilled. Fulfillment Centers are key parts to a companies supply chain so the consumer receives their goods in the quickest and most efficient way possible.
A Distribution Center (DC) is a facility that receives their products, stores the product and then the products are shipped based on their orders. A Distribution Center will ship goods directly to a retailer, wholesaler or directly to the consumer. Usually the products are shipped in bulk or on a pallets.
Final Thoughts - The main role of a DC is to store products in bulk and shipped in Bulk to a retailer, whereas the main role of an FC is to pick, pack and ship the products directly to the consumer. While bother terms are interchangeable, the needs for these 2 different types of facilities are much different. Most of the Fulfillment centers I have seen and being a part of the site selection usually are outfitted with a tremendous amount of internal infrastructure including pallet racking, pick and pack sortation systems, multi-level mezzanines and robotic picking areas. In a Distribution facility, they mainly consist of pallet racking and floor stacking capabilities.
Here at CBRE we have looked at the E-commerce Data and it states that for ever $1 Billion in sales, a company would require 1.25 million square feet of warehouse space to meet their consumer demands. Strategically locating these facilities to ensure your consumer has a positive purchasing experience is more crucial today than ever. 10 years ago when someone ordered a product on line, a 5-7 day delivery time was acceptable. Today that company would be struggling because the larger E-Commerce companies are 1 to same day delivery time. Those companies that take care of their consumers, will win. And that means having their products close to their consumers.
FAQs
While a fulfillment center processes and ships orders directly to consumers, a distribution center is a waystation within the wholesale portion of the supply chain where manufacturers deliver products to be distributed to retail outlets. For example, many grocery chains use distribution centers to stock their stores.
What is the difference between a distribution center and a fulfillment center? ›
In simple terms, DCs act as large centralised hubs for storing goods and distributing them in bulk quantities to a variety of outlets or other DCs. FCs , on the other hand, are designed to handle individual orders directly for end consumers and execute fast, efficient order processing and shipping.
Is Amazon a distribution or fulfillment center? ›
Our network includes hundreds of fulfillment centers worldwide and can help you reach customers around the globe.
What is the difference between a distribution center and a fulfillment center at Walmart? ›
A distribution center is a hub in the supply chain where products are received from suppliers and then distributed to retail stores or other fulfillment centers. Unlike fulfillment centers, they are not typically involved in shipping products directly to consumers.
Does fulfillment mean distribution? ›
While distribution centers may move millions of units at a time, they're processing relatively few orders and shipping them to just a handful of locations (primarily businesses). Fulfillment centers, on the other hand, are processing thousands of small orders per day, shipping each one to an individual address.
What are the three types of distribution centers? ›
There are three different types of distribution centers:
- Conventional - Material movement is performed by people and mobile equipment.
- Mechanized - Material movement is assisted by mechanized, conveyance and sortation systems.
- Automated - Material movement is performed in part or in full by machines or robotics.
A distribution center can also be called a warehouse, a DC, a fulfillment center, a cross-dock facility, a bulk break center, and a package handling center. The name by which the distribution center is known is commonly based on the purpose of the operation.
Is Kohl's a distribution center or a fulfillment center? ›
We take great pride in providing quality services that improve speed and maximize efficiencies for our business. Our distribution network includes nine distribution centers and six e-fulfillment centers.
Why Amazon warehouses are called fulfillment centers? ›
The name reflects the function: Amazon fulfilment centres are charged with fulfiling customer orders. In other words, Amazon warehouses not only store products but also serve as distribution centres where associates pick, pack, and ship orders quickly and efficiently.
Where is the largest Amazon fulfillment center located? ›
Amazon MQY1 Fulfilment Centre
The e-commerce giant has a combined worldwide capacity in excess of 166 million square feet in its distribution centres alone, with many in excess of 1 million square feet. Perhaps the largest however, is a new facility for 2021 in Mt. Juliet, Tennessee.
Types of Warehouses
- Private Warehouses. Private warehouses are owned and managed by suppliers and resellers to fulfil their distribution activities. ...
- Public Warehouses. ...
- Bonded Storage. ...
- Co-operative Warehouses. ...
- Distribution Centres.
Fulfillment centers ship directly to customers and distribution centers ship to stores. Fulfillment centers may be operated by retailers, manufacturers, or distribution specialists, while fulfilment c è nters are operated by independent owners.
Are warehouses and distribution centers the same? ›
Here are some of the key differences between the two:
Warehouses are mainly used for storing products until they are needed. Distribution centers store products as well as perform product mixing, cross-docking, order fulfillment, and packaging.
Is a distribution center the same as a fulfillment center? ›
While a fulfillment center processes and ships orders directly to consumers, a distribution center is a waystation within the wholesale portion of the supply chain where manufacturers deliver products to be distributed to retail outlets. For example, many grocery chains use distribution centers to stock their stores.
What does a fulfillment center do on Amazon? ›
An Amazon fulfillment center is a large warehouse where Amazon receives, stores, picks, packs, and ships customer orders. Amazon has over 175 fulfillment centers worldwide, and they are all equipped with state-of-the-art technology to help them process orders quickly and efficiently.
What do fulfillment centers do? ›
What is a fulfillment center? A fulfillment center is a part of the supply chain and serves as the hub for all logistics processes needed to get a product from the seller to the customer. It handles the entire order fulfillment process, ranging from order picking and processing to packaging and shipping.
What are two ways that fulfillment centers differ from direct distribution centers? ›
Expert-Verified Answer. The two characteristics of fulfillment centers which differ from direct distribution are: Warehousing is a primary role of fulfillment centers. Inventory is created on-demand rather than stored.
What is the difference between a distribution center and a fulfillment center quizlet? ›
Fulfillment centers ship directly to customers and distribution centers ship to stores.
What does a fulfillment center do? ›
A fulfillment center is a part of the supply chain and serves as the hub for all logistics processes needed to get a product from the seller to the customer. It handles the entire order fulfillment process, ranging from order picking and processing to packaging and shipping.
