Warehousing and distribution are closely linked in supply chain management. Warehousing involves the storage, organization, and management of goods, while distribution focuses on efficiently getting those goods from the warehouse to retailers or customers.
Together, they ensure products are stored properly and delivered on time, helping businesses meet consumer demand and maintain smooth operations.
In many ways, the connection between the two stems from overlapping duties. These duties can include anything from inventory management and order fulfillment to shipping, transportation, cross-docking, and reverse logistics.
Inventory Management
Inventory management plays a crucial role in warehouse distribution by ensuring that products are efficiently stored, tracked, and moved to meet customer demand.
At first glance, inventory management for warehousing and inventory management for distribution within a warehouse may seem like the same thing. But while the differences are subtle on the surface, they’re important, focusing on objective, scope, and cost.
While warehouse inventory focuses on storage for an organization and stock levels within the warehouse, the objective of tracking inventory in distribution is with direct regard to order fulfillment, shipping, and delivery. The role here is more about tracking inventory movements to ensure products are picked, packed, and shipped without delay, meeting customer demand promptly.
The difference in scope between warehousing and distribution comes down to what is required by their objectives. Warehousing is often more straight-forward. The scope of inventory management in warehousing is simply to ensure that products are being stored, managed, and categorized to achieve a more streamlined retrieval process.
The scope widens a bit when it comes to distribution. It puts a focus on tracking inventory as it leaves the warehouse and goes on to be delivered. This often involves integrating additional tracking systems with shipping carriers and includes the outgoing inventory’s delivery status.
When calculating the price for warehousing needs, it mostly comes down to storage optimization, accuracy in stock levels, and efficient space utilization. This differs from distribution, where pricing is going to be more focused on shipping, handling, and logistics. The emphasis is going to be on the inventory’s movement in real-time, ensuring order accuracy, and minimizing delays in getting products from the warehouse to the customer.
Simply put, while both warehousing and distribution rely on accurate inventory management, warehousing focuses on internal organization, while distribution is more concerned with the movement and delivery of products. And while the practice of inventory management is unique to each process, the two are reliant on each other to keep the supply chain functioning seamlessly.
Order Fulfillment
Order fulfillment encompasses all the steps from receiving an order to delivering the product to the customer or retailer.
To provide effective distribution, warehouses need to have a system in place to assist in the process. This is where the connection between warehousing and distribution really shines.
When an order is received, the customer information must be verified, along with the payment method. Equally important is confirming that the product being ordered is in stock. This is where the importance of inventory management comes into play.
Once complete, the order can move onto the core step of the fulfillment process: pick-and-pack. Pick-and-pack refers to the retrieval of products within an order and prepping them for shipment. The picking process can be done in a variety of ways, with the most common methods being single order picking, batch picking, zone picking, and wave picking.
Single order picking is done on an order-by order basis, while batch picking gathers items from multiple orders at a time. Zone picking is configured based upon a warehouse’s layout and where items are stored within that space. The warehouse is broken into zones, and order items are gathered based upon where the different zones lay within that grid system. Wave picking focuses on time above all else. Items are pulled in order of priority, based on how soon they need to be ready for transportation.
Regardless of which method is used, the overall goal is to optimize picking routes throughout the warehouse. Once collected and all items within an order are accounted for, the shipping process can officially begin.
Shipping and Transportation
In the world of warehousing and distribution, “transportation” and “shipping” are not considered to be interchangeable terms. Shipping is part of the pick-and-pack process, preparing for the order to leave the warehouse, while transportation is about the movement and route optimization.
For transportation to take place, the warehouse has to prepare the items by packaging and labeling them, completing any shipping documentation that might be needed, and communicating with the carrier.
Each package is labeled with correct shipping details, including address, barcodes, and tracking numbers. If possible, the items ordered are consolidated so they can be packaged more efficiently and with the intent of preventing damage during transit.
The warehouse can then initiate transportation by coordinating with the freight carrier to select transportation methods and managing routes for outbound shipments.
In essence, shipping is about the final preparation and dispatch of goods, while transportation is about how the goods move. So, once the order is handed off to the carrier, the shipping process is complete, and the carrier’s responsibility for transportation has begun.
Cross-Docking
Cross-docking is a particularly unique process for warehouse distribution because while the goods barely touch the warehouse, the process couldn’t be done without it.
Cross-docking is when goods are taken directly off a truck, sorted based on their destination or customer requirements, and moved directly onto outbound trucks to be sent back out of the warehouse.
The products typically do not spend much time in storage, which is a crucial point that differentiates cross-docking from traditional warehousing.
The ultimate goal of cross-docking is efficiency, which is why the goods are continuously moving. This direct transfer speeds up the distribution process and reduces inventory holding costs.
By bypassing the need to actually store products in the warehouse, cross-docking accelerates the flow of goods through the supply chain. This can result in faster delivery times, which is critical for industries that rely on quick turnaround.
Reverse Logistics
Unlike traditional logistics, which involves the movement of products from manufacturers to consumers, reverse logistics focuses on the flow of goods in the opposite direction.
A warehouse plays a central role in the reverse logistics process by serving as a key hub for managing the flow of returned goods. When it comes to reverse logistics, a warehouse is responsible for receiving, sorting, inspecting, storing, and redistributing returned items.
This typically includes handling returns, product recalls, or exchanges, which requires managing return shipments, optimizing reverse routes, and coordinating returns transportation.
Once returned items are received, they may need to be added back into stock, thus reentering the realm of inventory management once more.
In the context of reverse logistics, distribution plays a crucial role within the warehouse by ensuring returned products are efficiently processed, sorted, and either restocked or redistributed. In turn, this helps to maintain the continuous flow of goods and minimize delays in the supply chain.
Conclusion
Warehousing and distribution complement each other in the way that they work hand-in-hand to keep track of inventory, fulfill orders, and organize shipping and transportation.
Warehouses serve multiple functions in addition to storage, and distribution can use those functions to operate more efficiently to seamlessly move goods down the supply chain.
As supply chains continue to evolve, optimizing distribution within warehousing will become that much more important. Find out how Midwest Assembly, Warehouse & Distribution can help to meet your warehousing and distribution needs.