Distribution centers, also known as DCs, are essential to ensure the smooth flow of materials and, therefore, reduce costs. Despite being a fundamental part of a company's logistics, there are still many doubts about how they work.
This space is similar to a warehouse, but it differs due to its large and more modern structure. There, consolidated loads arrive from different places and are divided so that the stored products can be sent to points of sale in the region.
Therefore, understanding how a distribution center works is very important to think of strategies that enhance your company's competitive advantages. After all, only a deep understanding of a given topic allows new ideas to emerge.
Next, you will understand how a distribution center works and what its main functions are.
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How a distribution center works
We understand DCs as strategically located spaces, allowing stored goods to reach their destinations faster. Within the centers, these products undergo processes such as receiving, sorting and shipping.
The goal is simple: to increase the agility in the collection and dispatch of goods and avoid the accumulation of goods in stock. This reduces costs and increases the company's profits, ensuring its financial health.
You've probably already figured out how a distribution center works, right? It performs essential functions for maintaining the business and its effective management allows the organization to use its financial, human and material resources in the best way possible.
What are the functions of a distribution center?
After understanding how a distribution center works, it's time to delve deeper into its functions for the company.
Receipt
This is the first stage of any distribution center: receiving. The employees responsible for this phase are tasked with unloading the items sent and checking their quality and quantity.
If everything is correct, invoices are issued and this data is entered into the system. The way a distribution center works should be based on inventory updates, so that everyone has an overview of what is coming in. It is also necessary to identify the shipping time, expiration date and other relevant characteristics.
Movement
This step is quite complex and therefore requires attention. It involves transporting goods within the DC, from the place where they were received to the area reserved for storage.
Because this is a delicate moment, your employees need to be trained to avoid damage and errors during registration. For this reason, many companies rely on storage systems such as forklifts and pallets, which have a positive impact on the efficiency and operating costs of the distribution center.
Storage
Storage is, without a doubt, one of the pillars of how a distribution center works. This is where products are temporarily stored until they are sold. The company needs to have a certain amount of stock to ensure that it can supply ready-to-deliver products to its consumers.
There are several different storage methods, such as First In, First Out (FIFO). It is up to managers to decide which option best fits the needs of the business, taking into account the product in stock, the urgency of deliveries and their expiration date.
In any case, it is important to have a good storage system to make the most of the space. Storage shelves, for example, are often very useful and are popular because of their cost-effectiveness.
Order separation
Also known as picking, order separation must be understood in depth by anyone who wants to know how a distribution center works. Studies indicate that this stage is the one that consumes the most operational costs, reaching 60% in expenses.
Therefore, it is very important to invest in tactics that speed up this process and to monitor it closely to ensure that the flows are being followed correctly. It seems simple, but it involves several analyses to arrive at the most economical and safe process.
Among the variables that enter into the equation, such as warehouse size and available resources, managers need to understand how a distribution center works to make the best decision.
Expedition
Finally, we arrive at the shipping stage. This is where the goods that have been separated are checked and prepared for shipping. Employees working at this stage need to ensure that the items are well packaged so that they do not break during the journey to their final destination, which could cause losses for the company.
In some sectors, the shipping stage requires additional care, such as weighing to determine the freight value and documentation. It is also necessary to take into account unforeseen events, such as delays in transport trucks, which may affect the delivery date.
