The Discerning Characteristics of a Warehouse vs a Fulfillment Center

What’s the Most Cost-Effective Use of a Warehouse and/or Fulfillment Center?

While these terms are often used interchangeably and frequently intersect, there are fundamental operational differences that distinguish warehouses from fulfillment centers. Both play a key role in the e-commerce landscape as more individuals and businesses shift toward online shopping, so understanding what sets these two spaces apart can help to improve communication and streamline inventory management and processing for your operation.

Warehouses and fulfillment centers both serve as designated hubs in which product is stored until it is ready to be shipped to customers; however, they generally serve different purposes and customer bases.

What Do Fulfillment Centers Do?

Fulfillment centers are designed to turn inventory over very quickly. They can be set up for business-to-business (B2B) or business-to-consumer (B2C) order processing but fundamentally, they are meant for short-term storage and ship smaller parcels to individual customers. While warehouses serve the storage needs of companies without interacting directly with the consumer, fulfillment centers offer customer-facing services that help ensure a positive experience. Many businesses turn over the order fulfillment part of their logistics operation to fulfillment centers identified as third-party logistic companies (3PLs). These businesses typically serve multiple merchants with highly efficient order processing and expert customer service. They can adjust quickly to inventory fluctuations such as seasonality, and their inventory tracking helps businesses keep tight control of SKU counts to avoid issues with available stock quantities.

Pros and Considerations –

Pros

• Fast, accurate order processing
• Provide professional customer service.
• Efficient picking, packing and shipping processes
• Workforce trained to maximize output and minimize cost.
• Tight control of inventory tracking & stock levels
• Shipping cost savings

Considerations

• Holding fees can be assessed if inventory doesn’t move as anticipated.
• Handing over direct contact with customers and quality control… choose your 3PL partner wisely.

What Do Warehouses Do?

 

The goal of warehouses has always been the same…to store goods. They are designated buildings scaled to each company’s storage and inventory management needs. Their sole purpose is to store items safely and effectively until it’s time for them to ship. Most warehouses serve business-to-business (B2B) customers who ship products out to other retail outlets. As such, order fulfillment is typically large-scale, with full pallets of single SKU goods or customized with a mix of SKUs.

Pros and Considerations –

Pros

• Ample space and proper climate for inventory.
• Manage quality control of inventory
• Maintain direct contact with customers

Considerations

• Storage solutions primarily for full pallet storage
• May lack space for small order picking, packing and processing
• Seasonal fluctuations may be more costly re. labor hires & training

Impact of COVID-19 on Warehouses and Fulfillment Centers

Like all other areas of the global economy, the COVID-19 pandemic has had a profound impact on warehouses and fulfillment centers, alike. Fulfillment centers have had to contend with supply-chain disruptions and shifting consumer behaviors. Both warehouses and fulfillment centers have adopted more stringent protocols for infection control and prevention, leading to staff reductions due to social distancing guidelines. Warehouses have been keeping more inventory on hand to accommodate for shutdowns and shortages that, at the start of the pandemic, halted operations.

Ironically, the pandemic has led to greater reliance on fulfillment centers and third-party logistics companies to more quickly move products. While some organizations are looking to refine their own internal infrastructure, others are partnering with fulfillment centers to get the job done.

Let the Apex Team Serve All of Your Material Handling Needs

Apex Companies is ready to partner with you to integrate scalable and effective material handling solutions for traditional warehouses and fulfillment centers alike.  We offer a full-service, one-stop-shop experience for customers, from complete warehouse design to a single bay of pallet rack or automation solutions. Our experienced staff expertly installs and repairs racking systems, and we offer comprehensive training for forklift operators. Contact a member of the Apex team today so we can discuss your needs and long-term goals. Visit our website for more information, or call for a free consultation.