The term warehouse and distribution is often used interchangeably – the general concept may seem similar but there are significant differences between the two. Warehouses were a big part of the traditional supply chain management which goes by the rule of “maximum possible quantity of every product, everywhere, every time. This system, although was very much needed before, lacks information flow and planning mechanism. Distribution centres on the other hand are equipped with better information that allows planning and predicting of product demands and distributions.
The Evolution of Supply Chain Management
Warehouse services are static, it caters to stockpiling of inventories and these inventories are stored for months in the warehouse before being shipped out. A warehouse acts as effective storage. The operations of a warehouse are straightforward and don’t involve complex management of goods.
Having evolved to be the nerve centre of modern logistics and supply chain, a distribution centre offers value-added services such as packaging, cross-docking, product mixing and order fulfilment. Products are stored for shorter periods compared to warehouses, making a higher volume of products going in and out of the distribution centre.
A distribution centre is also more customer-centric and acts as a bridge between the suppliers and their customers. They accept orders from external customers and manage the storage, transportation and delivery of the order.
The complex nature of a distribution centre requires equally complex management, therefore, these centres are usually equipped with the latest technology to manage the processes.
So, is warehousing becoming obsolete?
The answer is a loud No. Warehouse management still exists and play an important role especially during high-demand seasons, where inventories are pre-built and stored before being sent to distribution centres closer to the sale opening. That is why warehouse rentals in Malaysia and worldwide are still high in demand till today.