I am sure that you have heard the terms Warehousing, Distribution, or Order fulfillment. But what do they mean and what specific activities conform to these logistics services?
Warehousing consists of storing goods for a specific length of time, to be sold or distributed later. The activity of ‘warehousing’ requires a physical location that could very well be a small spare room at home, or a large commercial building specifically designed for storage.
It is important to distinguish that warehousing provides nothing more than storage since it is often confused or mixed with Distribution, which is a totally different logistic activity.
A warehouse can provide additional services besides warehousing, such as Distribution. Distribution refers to the action of getting products from the supplier or manufacturer to the point of sale.
The distribution of goods involves retrieving goods from a storage location that could be a 3PL company or a distribution warehouse belonging to the owner of the goods. It also involves preparing them for transportation, ensuring packaging is adequate and that the correct documentation is in place (which is a critical step in supply chain management), and finally transporting the goods to the next point in the chain: the point of sale.
To illustrate the process let us examine the following case: Coca-Cola has 51 production facilities in the US. The beverages produced in these plants are moved to 350 distribution centers located across the nation. One of these distribution centers is responsible to supply the supermarket in your neighborhood where you can buy the Coca-Cola product of your choice.
Order fulfillment is defined as receiving, processing (pick and pull), packaging (if applicable), and delivering orders to individual customers.
These are the main steps of Order Fulfillment: Receiving inventory and registering by SKU’s (Stock Keeping Unit) or Part Numbers, receiving orders, order processing, shipping, and processing returns.
The Order Fulfillment can be done following different models. “In-house” is when a business uses its own staff to manage the whole process explained above. This model is very popular for small start-up companies with small order volumes.
Another model and by far the most used today is to hire a 3PL company that specializes in Order Fulfillment. This model of outsourcing is very suitable for growing businesses since they do not have to worry about investing in space, personnel, etc. (scaling-up), allowing them to maintain capital investments in check when volume grows or decreases.
Do you have questions about Warehousing, Distribution, or Order Fulfillment?
Promptus LLC is a 3PL licensed by the Federal Maritime Commission and by Customs & Border Protection as Freight Forwarder, NVOCC, and Customs Broker. We are experts in Warehousing, Distribution, and Order Fulfillment. We invite you to contact us to learn more about how we can help your business.