Fulfillment Center vs Warehousing: What’s the Difference?
In the transportation and storage industry, the terms “fulfillment center” and “warehouse” are often used interchangeably but, in practice, actually have very different meanings. While both are typically extensive facilities used to store goods as they move along the supply chain, their roles in a manufacturer or retailer’s business differ.
What is the difference between a fulfillment center and a warehouse, and what type of logistical and distribution service should a business choose for success in the supply chain?
What is Warehousing?
Warehousing operations can store raw materials, work-in-process, or finished goods or all of the above in its facilities for varying periods. These warehouses are typically large industrial buildings that hold these items until they are called for shipment. Warehouse solutions are crucial to the supply chain and can vary greatly in their service offering and storage capabilities.
Some businesses rent warehousing facilities and manage the operations, employee training, and inventory management themselves, while others prefer to outsource to third party providers (3PL’s) who operate out of a leased or owned facility. Warehouses typically operate in the fulfillment of orders from one business’s inventory to another business’s inventory. More frequently known as “B2B”. B2B operations typically ship in cases, pallets, totes, bags, or super sacks.
What is a Fulfillment Center?
A fulfillment center manages all the logistical processes associated with getting the product along the supply chain to the customer. Fulfillment centers are most frequently associated with the movement of finished products from the seller’s inventory directly to the end user or consumer. More frequently called business to consumer or “B2C”. B2C operations typically ship in “eaches” or multiples of “eaches”, which are “units” picked from cases and repackaged into new corrugated shippers (boxes) or sealable poly bags and shipped via parcel or LTL carriers.
Heavily relied upon in the ecommerce industry, a fulfillment center receives, processes, and fulfills customers’ orders. It handles order picking and provides other services such as packaging and kitting.
More than just a storage space, a fulfillment center is equipped with technologies that streamline the supply chain, track inventory, and ensure that goods reach their destinations as efficiently as possible.
How do Warehouses and Fulfillment Centers Differ?
A business considering hiring either the services of a stand-alone warehouse or a fulfillment center knows what they need. In reality, many businesses need and use both services but do so under the roof of the same facility to simplify inventory management. The same “eaches” you purchase off the retail shelf are coming from the same cases as “eaches” shipped to you via ecommerce.
To Another Business for Resale or to an End Consumer
A warehouse is primarily for shipping larger quantities of raw materials or products to a processor or manufacturer for further processing or to another business (retailer, distributor, wholesaler) for resale.
A fulfillment center is geared towards quick order processing and shipping of smaller quantities direct to the end user. The inventories in a fulfillment center typically turn faster and have to be laid out so as to facilitate the efficient picking and packing of small items with very inconsistent (or seasonal) order patterns.
Technological Differences
Today’s technology in most Tier 1 warehouse management systems (WMS) can handle both applications. If a WMS can handle electronic data interchange (EDI) for larger orders to other business or resellers, the WMS can be configured to handle orders and order confirmations from an ecommerce platform via EDI or an API. The WMS is relatively indifferent to the size or speed of the order if configured correctly and the product tables in the WMS are built for that application.
In either case, a busy warehouse or fulfillment center relies on technology for rapid processing, data translation, and data communications to ensure the smooth processing of orders.
Choose a 3PL Provider For Smooth Shipping
Choosing a stand-alone warehouse or a fulfillment center or a hybrid depends on your business’s specific goals and needs. Nevertheless, if outsourcing the management of inventory and order processing or fulfillment is your best alternative, partnering with a 3PL provider can be a great opportunity for you to focus on what you do best and let an experienced 3PL handle the back end of your supply chain process.
ABW provides seamless supply chain solutions to simplify the logistical arm of your business. We’ll handle everything from your warehousing, transportation, and secondary packaging, so you don’t have to. Contact us for more information and we’ll help you find the right storage and distribution solution for your needs.