Updated: 09.15.24
What Is the Difference Between a Distribution Center and Fulfillment Center?
Have you wondered how your online orders get delivered so quickly, or how stores seem have what you need (well, at least most of the time)? If so, the answer lies in the operation of distribution and fulfillment centers.
But there are considerable differences between these two facilities. And if you’re in logistics and supply chain management, it’s important to be able to distinguish them to optimize your operations and meet customers’ expectations. They may seem interchangeable at first, but their distinct roles enable products to move from manufacturers to consumers worldwide.
What is a Distribution Center?
Distribution centers are facilities where products arrive from suppliers before being redistributed (usually in bulk) to retailers, wholesalers and other businesses. A distribution center includes the following key characteristics:
- Serves as a hub for receiving, storing and distributing large volumes of goods to various business locations.
- Handles significant inventory levels with a main focus on rapid turnover to ensure retailers are fully stocked, while preventing overstocking.
- Processes bulk business-to-business (B2B) orders.
- Strategically located near or within transportation networks to minimize lead times and reduce transportation costs.
- Employs advanced warehouse management systems (WMS) for more efficient inventory tracking and bulk order processing.
What Is a Fulfillment Center?
Fulfillment centers are designed to handle individual customer orders for direct shipment. They tend to be operated by third-party logistics providers and specialize in picking, packing and shipping for business-to-consumer (B2C) transactions. A fulfillment center includes the following key characteristics:
- Manages the storage and shipment of products directly to consumers while working with retailers.
- Maintains optimal inventory levels to guarantee quick responses to customer orders while avoiding stockouts.
- Mostly processes individual orders with an extra emphasis on accuracy and speed.
- Located in close proximity to major consumer areas to expedite deliveries.
- Takes advantage of advanced software and automation for real-time inventory tracking and efficient order processing.
- Not ideal for long-term storage, since they focus on rapid inventory turnover to meet consumer demand.
Illustrating the Differences
Imagine a company that manufactures home appliances. Once they finish production on a range of items, they need to distribute those products to both retail stores and individual online customers.
When they work through a distribution center, the manufacturer will ship large quantities of their appliances to the center. The distribution center will temporarily store those products before redistributing them, in bulk, to a range of retail stores around the country. The retailers then stock their shelves so the appliances are available for in-store shoppers.
The manufacturer can also send products to fulfillment centers, in particular when considering their online sales. They’ll send a smaller inventory to a range of fulfillment centers so that when customers place online orders, the fulfillment center can pick, pack and ship the appliance directly to a customer’s home. The fulfillment center is responsible for swift processing to meet expectations for speedy deliveries.
In other words, a distribution center’s goal is to facilitate the movement of goods in bulk to businesses while optimizing their logistics for distribution on a much grander scale. A fulfillment center’s goal is to focus on individual customer orders with an emphasis on speed and accuracy to enhance customer shopping experiences.
Which One Does Your Business Need?
The Freeport Center
At the Freeport Center, we’re your premier distribution, fulfillment, and warehousing destination with services custom-tailored to suit your needs. Thanks to our 78 buildings ranging from 4,000 to 400,000 square feet, we provide the unparalleled flexibility you need to be successful in today’s market.
Our central location in the Intermountain West provides easy access to a truly vast transportation network. That means we’re the ideal hub for both inbound and outbound logistics. No matter if your business needs efficient storage, handling or distribution, the Freeport Center is fully equipped to support your business growth.
The big question: which of these services and which center aligns with your business goals? We’re ready to help you make the right choice. Reach out to the Freeport Center at (801) 825-9741 or fill out our Contact form to find out how we can support your logistics needs today!