The terms warehouse and distribution center are often used interchangeably. However, these are 2 distinct parts of the overall distribution logistics function. The warehouse offers efficient storage. The distribution center offers a range of order fulfillment functions. The combination of third-party distribution warehousing provides both warehouse and distribution functions in one facility. Namely, a place from which wholesale and retail orders are shipped.
Serving as a core part of a business’ supply chain, the distribution warehouse offers high-tech storage, transportation, cross-docking, order fulfillment, labeling, packaging, and any other services required to complete the order cycle.
Combining the warehousing and distribution services functions in 1 location allows companies to operate over a range of distribution models.
Third-Party Distribution Warehousing Models
The following are the most common third-party distribution warehousing models.
- Conventional models
- Direct marketing models
- Home-based business models
The wholesaler is a customer of the manufacturer, buying goods from the manufacturer in larger wholesale quantities. The wholesaler pays the manufacturer for bulk orders. Goods are shipped to the wholesalers from the third-party distribution warehouse as they are for any other customer. The manufacturer pays the 3PL for its services.
Direct Marketing Models
This active warehousing attitude makes direct factory-to-retail models practical. Direct factory-to-consumer models work by providing comprehensive logistics in 1 facility. The distribution warehouse is not passive but offers a variety of services in addition to storage throughout the distribution process. The manufacturer pays the distribution warehouse, as a client, for a variety of necessary logistical services.
Home-Based Business Models
The distribution warehouse has created new options for start-up, home-based, and online businesses. These types of business models rarely have the infrastructure to store products, fulfill orders, or ship their products. However, these services are available at a distribution warehouse at a manageable cost for small businesses.
CWI Logistics is Your Third-Party Distribution Warehousing Provider
At CWI, we have over 5 decades of experience in product distribution and warehousing. We would love to learn more about your specific needs.
Please contact us today to get started!