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What Is a Distribution Center and How Do They Work?

Distribution centers are an often overlooked, but extremely beneficial part of the movement of goods between a supplier and the customers who are purchasing those products. Distribution center operations ease the strain on the supply chain process by containing several steps in one place.

The concept of distribution centers may seem complex, but it is really quite simple and the benefits are plentiful. If your company is considering using a distribution center, continue reading to learn about distribution centers, the benefits of using one and where to find the best distribution, warehousing and fulfillment centers in the Western U.S.

What is a distribution center—and how is it different from a warehouse?

The distribution center is a facility where goods are stored, handled and shipped to resellers or end users. A thoughtfully planned distribution center is critical to the success of a company’s supply chain strategy and, thus, its bottom line. It’s one of the most essential components of optimizing order fulfillment and the overall customer experience.

The definition of a distribution center differs from that of warehouses and fulfillment centers. While some may lump distribution centers and warehouses into the same role within supply chain management, there are some important differences.

Distribution centers are not typically used for long-term storage of goods or raw materials. Warehouses, on the other hand, are designed to store the raw materials needed for finished goods until required for manufacturing. And warehouses are commonly larger than distribution centers, allowing them to hold more raw materials or finished products for longer periods of time.

Simply put, the role of a distribution center is to receive goods (often from a company or supplier’s warehouse), store them for a short amount of time, manage the inventory (both in the facility and transit) and move those goods in a timely manner to where they’re needed.

How does a distribution center work?

The timely delivery of goods to a customer, whether that’s a reseller or the final user, is key to any company’s reputation and viability. An optimal distribution center utilizes forklifts, pallet jacks, manual labor and, in some cases, controlled warehousing systems to help get products to their destination on time.

There can be a number of ways that a distribution center operates. First, the distribution center receives a company’s products. Once the goods arrive, they may be quality checked to ensure that the order has been accurately filled.

The products are then stored inside the warehouse. Depending on the size of the product, they are stored in bins or on shelves. This organization system allows for easy access to anything that may be needed to fill an order.

As orders from customers and retailers arrive, they are processed to see which items are needed to fulfill the order. Once the order is processed, the necessary products are removed from the shelves and prepared to be shipped out.

The finished order is then loaded into a vehicle, typically a truck, and transported to its next location. Once the vehicle delivers the order to its final destination, the distribution process is complete.

Additional distribution center operations

Back at the distribution center however, there is a bit more to be done. The movement of goods through the distribution center must be monitored to ensure that they have the goods they need to complete orders. Inventory levels are taken often and more goods or products are ordered as necessary.

Since the goal of a distribution center is to ensure companies have efficient storage and handling of their goods, as well as good transportation, it is clear that this step is vital in keeping distribution centers productive and effective.

What is one advantage of using a distribution center?

There are many advantages that come with using a distribution center in your company. One of the greatest advantages is how much it can improve the logistics and efficiency of a company’s supply chain.

The use of distribution centers can ensure that products are available as needed. They also reduce the risk of stockouts occurring, something that can cause order  backlogs, which can complicate the entire process.

Distribution centers are able to create these benefits through centralized storage and distribution of products. They can reduce the costs of shipping, as well as how much time it will take for a product to be delivered. Distribution centers manage and control inventory to ensure that the products customers need are available.

Using a distribution center streamlines the movement of goods between customers and supplies, simplifying the process and making it much easier for everyone involved. All of these benefits culminate into improved customer satisfaction, another great benefit of distribution centers.

The Freeport Center

Located in close proximity to an impressive transportation network of highways, airports and railways, the Freeport Center is the premier distribution center in the western United States.

The Freeport Center boasts 78 buildings spanning 680 acres, with plenty of room for vehicle transport and delivery. And with buildings ranging in size from 4,000 to 400,000 square feet, we are the ideal business partner for any company, large or small, seeking efficient production, storage, handling and distribution of goods.

Utah Is A “Free Port” State

Additionally, Utah is a Free Port state, meaning that inventory stored within its borders is tax exempt from the inventory taxes typically found in many other states. This tax benefit covers all inventory that is shipped to the Freeport Center in Clearfield, Utah. Additionally, it applies the inventory when it arrives at its final destination.

An unrivaled transportation network, a diverse array of leasable space, Utah’s status as a Free Port state and our centralized location accessible to the major western U.S. markets are all reasons why more and more businesses choose to call the Freeport Center home. Visit our website or call (801) 825-9741 to learn more.