Distribution Centers are facilities that are used for temporary storage and redistribution of goods as customer orders are received; the importance of these centers is placed on the processing and moving of goods from retailers to consumers, instead of on storage.
A distribution center is the focal point of the operation. At the start of the process, production sends goods to the center where they are arranged and stored until orders come in. With modern day technology, professionals are capable of completing their job in a way that enables a systematic and quick retrieval of the products. Technology now allows for personnel to readily accept inbound shipments, identify goods, and sort and organize products in a secure and structured system. Centers are now using state of the art order processing, transportation and distribution center management to receive, scan, locate, store, pack orders, process orders, and plan loads.
A well-assembled and managed center provides value-added services, customer focus, and technology-driven innovation. Rather than merely storing goods, distribution centers offer services such as transportation, order-fulfillment, labeling, and packaging, as well as services that aid the completion of the order process, including order preparation, shipping, receiving, returned-goods processing, and performance measurement. While the center should aim to find the most effective and cost-efficient way to store and distribute products, it’s mission is to provide outstanding service to its customers.
In 2011, Nordstrom faced a decrease in sales, but instead of focusing on their loss, they saw room to grow within their company: multichannel capabilities. They updated their process of inventory, which now allows online shoppers to see products in retail stores. Avoid issues between applications by building a strategy that uses one to two order-management systems.
Distribution centers can also be seen as an ongoing investment in a business’s supply chain. Rather than perceiving logistics as a goal with an endpoint, think of it as an area of continual growth completed on a consistent schedule. Amazon provides an excellent example of this idea. Recently, the company announced the addition of 18 more distribution centers that will lower short-term profits but will most likely increase long-term advantages. Due to their creation of an extensive distribution network that they regularly add to, Amazon has found great success.
Distribution centers also help to further a company’s focus on sustainability. For example, Staples wanted to remove waste and inefficiency within their organization; so they created an initiative titled “Race to the Top” to challenge their product manufacturers and distribution centers to develop stronger sustainability practices. Staples created supplier scorecards to track attributes like packaging costs and shipping frequency to help compare centers and see where inefficiencies could be found. For instance, bulk shipments helped to reduce packaging costs and make shipping more productive.
Distribution centers are the main link between consumers and suppliers, and its management must be knowledgeable of customer needs, but also of cost-effective and efficient systems for meeting those needs.