The terms warehouse and fulfillment center are often used interchangeably in logistics and supply chain management, but actually, they are different from each other. Both share a lot of similarities. However, they largely differ in terms of benefits and functions. In this article, you will get to know how a warehouse differs from a fulfilment center and which solution is better for your business.
What is a Warehouse?
A warehouse is a large storage center or a spacious building that houses products in bulk. It is designed to store a business's inventory until it is redistributed to the consignee. Warehouses are an integral part of supply chain management.
If you walk through a warehouse, you will notice high shelves stacked with many products and forklifts driving around and moving containers. Inventory is added, shifted to different locations when required, and then transferred out to a warehouse on a daily basis.
The type of inventory a warehouse will house determines its size, shape, and function.
What are the Different Types of Warehouses?
Have a look at seven different types of warehouses:
Private Warehouse: A private or proprietary warehouse is owned by a company division. If a business is interested in a private warehouse, it needs to make a huge upfront investment to secure it. Wholesalers, distributors, and manufacturers usually opt for private warehouses.
Public Warehouse: Public warehouses are owned by the government and rented out to private-sector businesses needing extra inventory space. Due to their affordability, public warehouses are a good choice for newly established or growing businesses, such as e-commerce startups.
Cooperative Warehouse: Such warehouses are owned by multiple companies or businesses. These organizations store their products in a mutual space and save money. Cooperative warehouses are a great option for businesses with similar inventories.
Smart Warehouse: In smart warehouses, processes like packing, storage, and transport are automated with the help of AI, robots, or drones. Automated warehouses are a go-to option for large e-commerce companies like Amazon.
Consolidated Warehouse: These warehouses collect small shipments from different suppliers and store them in one place. They are an economical option for companies that do not have large amounts of products, such as new startups or small businesses.
On-Demand Warehouse: This type of warehouse provides short-term storage, transportation, and inventory management services to businesses on a monthly basis. Businesses looking for extra inventory space for seasonal needs can opt for these warehouses.
Climate-Controlled Warehouse: A climate-controlled warehouse provides storage space to businesses that deal with items or products that need to be stored in a temperature-controlled environment.
What is a Fulfillment Center?
A fulfillment center or a distribution center is a physical space that stores items for a brief amount of time while inventory and orders are processed, packed, and shipped. A fulfillment center is also an important part of the supply chain and includes the following operational functions:
Freight transportation or shipping
Order fulfillment
Order picking
Order processing
Order shipping
Returns management
Customer service
Businesses and startups have two options when it comes to searching for a fulfillment center:
operate on their own, or
collaborate with a small business 3PL provider.
How do Fulfillment Centers Work?
Fulfillment centers store, pick, pack, and ship products for B2C brands and send them to the customer's doorstep. B2C brands outsource their orders to a 3PL for small businesses. Meanwhile, they can focus on managing sales and company growth. Fulfillment centers can also handle B2B orders.
Difference Between Fulfillment Centers and Warehouses
The structure and purpose of a fulfillment center and a warehouse seem similar, but the two are, in fact, different. Here are the main differences between the two:
Storage:
A warehouse is designed to accommodate inventory storage for an extended period. By contrast, a fulfillment center provides a short-term storage solution so that sellers can turn over inventory very quickly. Sometimes, a warehouse also serves as a distribution center, offering both short-term fulfillment services and long-term storage. In other words, a fulfillment center is a type of warehouse, but a warehouse is not always a fulfillment center.
Operations
Warehouses are inactive parts of a supply chain purely meant for storing inventory. A fulfillment center, on the other hand, is quite the opposite. Inventory shipments usually reach fulfillment centers in bulk so that individual orders can be packaged and shipped to customers.
Customers
A warehouse typically deals with businesses. On the other hand, fulfillment centers deal with businesses and customers. They fulfill online orders. However, some fulfillment centers serve both B2B and B2C brands.
Goals
A warehouse aims to provide safe and efficient long-term inventory storage solutions from several months to a year. On the other hand, the goal of a fulfillment center is to fulfill orders in the shortest possible time. However, they do not usually store inventory for more than a few months. The goal of a warehouse is to secure and efficiently store inventory for a long period, typically several months to a year.
Warehouse vs. Fulfillment Center: Choose the Best for Your Business!
Being a business owner, you must choose the right option for your business. The choice between a warehouse and a fulfillment center relies on your business requirements. Unless you aim to store goods for an extended time, fulfillment centers can be a valuable choice for your business. They provide cost-effective storage and ensure speedy order fulfillment. Therefore, if you are looking for an ideal storage solution for your business, opt for a reputed fulfillment center to store your inventory.
