Warehouse vs Distribution Centres: What’s the Difference?

Depending on your industry and the nature of your supply chain, you may wonder whether warehouses or distribution centres would best suit your business. While both facilities provide storage and order processing to some extent, several differences between warehouses and distribution centres make one solution better suited to handling particular products.

This article will compare the services provided by warehouses and distribution centres to help you decide which would benefit your order fulfilment process most.

Warehouse versus Distribution Centres: What are they?

What is a Warehouse?

Warehouses are large commercial buildings designed to provide storage between the manufacturing and distribution stages of the supply chain. Many retailers partner with manufacturers or suppliers in other countries, enabling warehouses to support closer inventory management and faster deliveries to their customer base. 

Unlike other methods of order fulfilment that seek to minimise the time it takes for goods to reach customers from manufacturers, warehousing typically involves storing products for extended periods. This approach has enabled retailers to benefit from larger shipments, allowing them to order goods in bulk rather than shipping individual items. 

Depending on your business and the type of goods you ship, you will need a different type of warehouse to manage your inventory. Other types of warehouses include:

• Cross-dock warehouses are designed to move goods directly from inbound shipments to outbound vehicles. 
• Temperature-controlled warehouses: These warehouses are designed to store perishable goods, such as fresh produce and medicines, to prevent spoilage during storage.
• Seasonal warehouses: Designed for the long-term storage of products that are only sold at specific times of the year. 

Because cross-border shipments can arrive by various modes of transport, warehouses are typically located near major transportation hubs, such as motorways, railways, ports, and airports. Depending on the warehouse's location, it will have specially adapted docks with the appropriate machinery to unload shipments, such as forklifts and cranes.

What is a Distribution Centre?

Distribution centres are logistics facilities that consolidate the fulfilment process, allowing retailers to store, pick, pack, and deliver goods under one roof. Operated by third-party logistics (3PL) companies, distribution centres leverage the talents of multiple logistics specialists to provide retailers with a complete storage and shipping solution. 

When goods arrive at a distribution centre, they are stored until purchased, much like warehouses. The key difference between a warehouse and a distribution centre is that once a customer has placed an order, the order is picked, packed and shipped directly from the facility. Furthermore, some distribution centres offer additional handling services, such as processing, quality control, repackaging, and light assembly of partially constructed products.

Advancements in order fulfilment technologies have enabled some distribution centres to partially or fully automate their facilities, streamlining the process and reducing accidents caused by human error. The following three categories typically determine the level of automation in distribution centres:

• Conventional centres: These distribution centres feature a predominantly human workforce that relies on manual labour and mobile equipment for material handling.
• Mechanised centres: These distribution centres use conveyors and item sorting systems to facilitate material movement.
• Automated centres: These distribution centres use sophisticated machines or robotics to partially or fully manage material handling. 

Whereas warehouses often receive shipments directly from docks and airports, distribution centres are more likely to be near motorways, making them accessible to both inbound and outbound vehicles. 

As distribution centres are further along in the supply chain, retailers often spread their shipments across multiple distribution centres operated by the same 3PL company rather than house their entire inventory in one warehouse. This allows retailers to offer faster delivery to customers across the country, as goods can be distributed from their nearest centre rather than routed from a single location.

What Is the Difference Between a Warehouse and a Distribution Centre?

In this section, we will directly compare warehouses and distribution centres to determine how they differ. 

• Storage time

Warehouses primarily serve as storage facilities, so goods spend more time in warehouses than in distribution centres. While this makes warehouses preferable for goods held for extended periods between manufacturers and distributors, such as seasonal goods, distribution centres are better equipped to handle goods with shorter supply chains, such as fresh produce and individual orders.

• Processing speed

Distribution centres are designed to streamline order processing, allowing goods to be received, sorted, repackaged, and delivered to customers in the shortest possible timeframe. Warehouses differ from distribution centres in that they are designed for storage, making their processes slower and less sophisticated than those of most distribution centres.

• Order fulfilment capabilities

While distribution centres have some storage capacity, the primary benefit of using them over warehouses is their comprehensive order fulfilment services. From receiving and reorganising shipments to repackaging goods for stores and individual consumers, and from liaising with courier services to provide delivery tracking to clients and their customers, distribution centres provide complete order fulfilment solutions. On the other hand, warehouses specialise in the safe and secure storage of goods.

What are the Challenges of Warehouses vs Distribution Centres?

Depending on the needs of your business, warehousing or processing your goods through a distribution centre can be incredibly beneficial to your supply chain and order fulfilment services. However, as valuable as these facilities can be for your business, you must be aware of the challenges you may face when shipping your goods to warehouses vs distribution centres.

• Inventory management 

While automated distribution centres are more reliable at tracking inventory levels, most warehouses and distribution centres lack real-time inventory management systems and rely on manual inventory counting or periodic systems. Manual inventory counting is a slower, labour-intensive process which can be subject to human error. In contrast, periodic inventory systems are updated infrequently, which can result in either increased or decreased inventory levels, depending on how recently shipments have been received.

• Inventory receiving

Due to the limited scope of their inventory management systems, warehouses and distribution centres rely on manufacturers reporting correct shipment sizes to prepare their facilities and keep stock levels updated. If manufacturers incorrectly report their shipment sizes, warehouses and distribution centres may be overwhelmed by more goods than they can store, or falsely report extensive inventories. This could lead to situations in which customers purchase products that are unavailable. These errors can lead to inflated storage costs and stall the supply chain in either situation.

• Theft

Unfortunately, warehouses and distribution centres can be subject to internal and external theft. Depending on your approach to inventory management, theft can be traced to a specific stage of your supply chain, and the culprits identified. However, given the challenges of inventory management, it can take considerable time and resources to identify the perpetrators.

How Can Whistl Help with Distribution?

With over 1 million square feet of warehouse and distribution centre space strategically located across the UK, Whistl operates a sophisticated distribution network that supports our clients' needs. Experienced order fulfilment specialists manage our facilities. They are integrated with real-time inventory management systems, so our clients can rest assured that their goods and brand reputations are safeguarded.

While we offer separate warehouse and distribution centre solutions, many of our facilities provide both warehousing and distribution capabilities, allowing our clients to take advantage of either service. For more information about our services or clarification on the warehouse vs. distribution centre debate, please contact our order fulfilment team today to discuss options for your business.