When looking for a storage solution for your products, you’ll hear the terms distribution center and warehouse thrown around — sometimes as if they’re the same thing. Sure, both facilities keep goods safe. But they’re distinct in many ways, from internal operations to their role in the supply chain.
Knowing their differences and what to consider when choosing between them helps you select the right storage setup for your business.
Understanding Warehouse and Distribution Centers
Here’s the basic definition of each term:
What Is a Warehouse?
A traditional warehouse is a facility for keeping large quantities of products. It’s usually a storage-only space without operations like order processing or packaging. Manufacturers, wholesalers, importers, and logistics companies use this facility to store inventory until it’s ready to move.
Warehouses are for long-term storage. When products go in, they are arranged to optimize picking, a best practice called warehouse slotting. But they can sit on shelves for months before getting shipped out in bulk.
The facilities are often situated near transportation lines like highways, airports, and docks.
What Is a Distribution Center?
A distribution center is not only a storage facility, but also a place for preparing orders before shipping them to the next or final destination. As part of an organization’s fulfillment process, a distribution center involves the following operations:
- Receiving and storing inventory
- Picking and packing
- Restocking a company’s different retail outlets
- Returns management
Inventory in a distribution center often doesn’t stay there for long. Products come in and move out quickly. E-commerce companies set up multiple distribution centers in different locations to keep their products closer to customers, which speeds up delivery.
However, these facilities are typically run by third-party logistics (3PL) providers because owning and operating them can be expensive for a business.
5 Key Differences Between a Warehouse and a Distribution Center
A warehouse vs distribution center: What sets them apart?
The most fundamental difference between them is that a distribution center handles storage and fulfillment while a traditional warehouse offers storage only.
1. Storage Capabilities
Traditional warehouses are built for bulk, long-term storage. They’re places to stockpile raw materials or finished products for as long as necessary. Distribution centers, on the other hand, are designed for short-term storage because products move in and out faster.
2. Focus
The main goal of a warehouse is to keep products safely. In other words, storage is the top priority of warehouse management.
But that’s not the only focus of distribution centers. Apart from storage, these facilities prioritize speed and fulfillment. The aim is to process orders quickly to improve customer satisfaction.
3. Operations
Warehouses run on simple operations. There’s not much daily activity beyond receiving, tagging, storing, retrieving, and dispatching products. This simplicity leads to little or no use of technology in warehouse optimization.
Meanwhile, distribution centers involve the above operations — plus order processing, picking, packing, and returns management. In short, processes inside a distribution center are customer-centric. These value-added services — in addition to the need for speed in the facilities — explain why distribution centers lean heavily on technology to keep everything running smoothly.
4. Logistics and Transportation
Traditional warehouses offer storage only; no shipping services. To move inventory out of the storage facility, you must arrange freight yourself.
Distribution centers, on the other hand, usually partner with shipping carriers that pick up and deliver orders to the final consumer or a company’s retail locations. Some logistics services in these facilities streamline transportation.
Cross-docking, for example, is a process where products from a source (supplier or manufacturer) are directly shipped to their destination (customer address or retail location) with minimal to no storage time.
5. Role in Supply Chain
Warehouses are the backbone of the supply chain. They give businesses a place to stash inventory, making it easier to manage stock levels and stay ahead of demand fluctuations. Got a busy season coming up? A warehouse with plenty of storage space allows you to stock up and be ready to meet seasonal demand — no last-minute panic about running out of inventory when orders start pouring in.
Distribution centers play the same role, and so much more. Their strategic locations, usually close to customers, help speed up delivery. Plus, processes like cross-docking can skip the storage step entirely, moving products straight from suppliers to customers. That means faster shipping and a more efficient omnichannel supply chain. Transportation management is also key here.
How to Choose the Right Solution
Warehouse storage solutions vs. distribution centers: Which one is right for you? Picking the best between the two comes down to what your business needs most — storage, speed or both.
Traditional warehousing services are your best bet if:
- You need to store raw materials or finished products long-term
- Your inventory moves slowly
- You ship bulk orders rather than individual items
Go for distribution centers if:
- Fast delivery is a priority
- You want value-added services like packing, labeling, or kitting
- You need logistics and transportation in addition to storage
- Your stocks move quickly
Enhancing Warehouse and Distribution Center Operations With Technology
When it comes to warehousing and distribution centers, you can run your own facilities. Or, you can hire third party services. Either way, make sure you leverage best practices. And one of the biggest ones is using supply chain technology.
However, not all tech solutions are reliable. Be careful when evaluating your options. Choose a robust tool like Surgere that enables you to:
- Track inventory accurately and in real time using radio frequency identification (RFID).
- Map out and optimize your warehouse layout to improve traffic flow, hasten pickups, and maximize your storage space.
- Access the most critical data of your modern supply chains and use it to improve operations.
- Leverage the power of artificial intelligence (AI) in your facility.
Don’t wait to modernize your warehouse and fulfillment centers. Contact Surgere today to see how our technology speeds up and streamlines your supply chain operations.
FAQs About Warehouses and Distribution Centers
What does DC mean in a warehouse?
DC is the short form of distribution center.
Do warehouses and distribution centers have the same functions?
While both store goods, the difference between a warehouse and distribution center is their primary functions. Warehouses focus solely on long-term storage of inventory.
Distribution centers, on the other hand, focus on order processing and fulfillment in addition to short-term inventory storage.
What qualifies as a distribution center?
A distribution center is a place where goods are stored and prepared for fulfillment. Operations in the facility include picking, packing, sorting, and labelling.
