|Distribution Center Definition for the Warehousing Industry presented by Apparel Search|
A distribution center for a set of products is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products (goods) to be re-distributed to retailers, to wholesalers or directly to consumers. A distribution center is a principal part, the "order processing" element, of the entire "order fulfillment" process. Distribution centers are usually thought of as being "demand driven". A distribution center can also be called a warehouse, a DC, a fulfillment center, a cross-dock facility, a bulk break center, and a package handling center. The name by which the distribution center is known is commonly based on the purpose of the operation. For example a "retail distribution center" normally distributes goods to retail stores, an "order fulfillment center" commonly distributes goods directly to consumers, and a cross-dock facility stores little or no product but distributes goods to other destinations.
Distribution centers are the foundation of a "supply network" as they allow a single location to stock a vast number of products. Some organizations operate both retail distribution and direct-to-consumer out of a single facility, sharing space, equipment, labor resources and inventory as applicable.
The way a typical retail distribution network operates is to have centers set up throughout a commercial market. Each center will then serve a number of stores. Large distribution centers for companies such as Wal-Mart serve 50
Since a large retailer might sell tens of thousands of products from thousands of vendors, it would be impossibly inefficient to ship each product directly from each vendor to each store. Many retailers own and run their own distribution networks, while smaller retailers may outsource this function to dedicated logistics firms that coordinate the distribution of products for a number of companies. A distribution center can be co-located at a logistics center.
Large distribution centers might receive and ship more than ten thousand truckloads each year, with an individual store receiving only a couple trucks per week up to 20, 30 or more per week. The distribution centers can range in size from less than 50,000 square feet (5,000 m2) up to the largest approaching 3 million square feet (300,000 m).
Although the primary role of a distribution center is to receive large quantities of products and ship small quantities to individual stores, an important secondary role is storage. Many retailers have prioritized having as many items in stock at one time as possible. To conserve space, minimize inventory costs, and maximize the variety they offer the retail might only stock one or a few items of a particular product. This requires the ability to ship a replacement quickly once an item is sold. By keeping product on hand in the distribution center, the retailer can ship a replacement almost immediately after a product is sold.
Storage locations and storage containers
Totes are reusable containers used to hold and transport goods.
Another way to look at a distribution center is to see it as a production or manufacturing operation. Goods arrive in bulk, they are stored until needed, retrieved and assembled into shipments. The efficient processing of a distribution center can greatly impact the final price of product as it is delivered to the end user. Efficient processing not only directly impacts the cost of goods through reduced labor it indirectly impacts the cost of goods through reduced inventory. Inventory represents an investment with its associated investment interest or inventory carrying cost. Reducing the processing time of order processing can directly reduce the amount of inventory necessary to be stocked in the operation.
The most efficient method of distribution would be shipping a full truckload or railcar directly from the manufacturer to the retailer. After this, the next most efficient method would be to ship a full truckload to a distribution center, unload full pallets of products and immediately load the pallets onto trucks that are going to individual stores. Both of these methods can only be used on very high volume items. Most products cannot be delivered in this manner and pallets, or even individual boxes, must be broken down and divided.
Once a full pallet must be broken apart, the costs of handling the product can increase quickly. Many distribution centers use large sortation systems with miles of conveyor to move products through the facility and into a truck. They also may have automated equipment for de-palletizing and re-palletizing product. Some of the most sophisticated systems can convey product straight into storage racks and then convey out of the racks to trucks, all automatically. With a wide variety of product sizes and weights, these systems are designed to handle a specific range of products. Very large/small or heavy/light products require varying degrees of manual handling.
As the process of handling involves more steps and is more manual, the cost increases. Storing products instead of receiving and immediately shipping them, adds cost. Firms must determine where lost sales from not having product on the shelves are balanced by the increased handling and storage costs.
Distribution center organization
All distribution centers have three main areas and may have additional specialized areas. The three main areas are the receiving dock, the storage area and the shipping dock. In small organizations it is possible for the receiving and shipping functions to occur side by side, but in large centers, separating these areas simplifies the process. Often a distribution center will have dedicated dock doors for each store in its shipping area. The receiving area can also be specialized based on the handling characteristics of freight being received, whether the product is going into storage or is going straight to a store or by the type of vehicle delivering the product.
Planning a distribution center
A number of key components go into the overall planning of a distribution center in order to maximize its efficiency. If the distribution center is relying on a conveyor system suspended from the ceiling, consideration needs to be given to the weight-bearing capacity of the ceiling joists. If the conveyor system runs along the floor, than consideration needs to be given to where columns are placed in the design stage, particularly as they relate to the flue space between pallet rack frames. Other considerations in the planning should include attention to such areas as slotting, product replenishment, storage media, and power requirements.
Simple distribution center outline
Because many distribution centers service both large and small clients, especially those which store a specific type of service as opposed to those which serve a specific company, roles and departments are generally more complicated. A simple distribution center which serves many clients a specific theme or type of service may include:
Other departments that a distribution center may have include:
Distribution Centers also have a variety of supporting departments. These include human resources, maintenance/facilities operations, production control and accounting.
A distribution center will have a General Manager that manages the facility. This individual will then have a number of department managers that report directly to them. Most distribution centers divide the staff into two categories - direct labor and indirect labor. The direct labor staff executes the distribution processes, the indirect labor staff supports the direct labor staff. Each department is then composed of supervisors and warehouse workers. The "direct labor" jobs of a warehouse can include:
Examples of the many other "Indirect labor" departments and jobs within a warehouse can include:
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