Distribution Center Management Overview

Distribution centers are the anchors of a well-managed supply chain. Without a well-run distribution center, products won’t reach customers, stores can’t serve their customers, and your employees will be at greater risk of injury.

This article will take is an overview of how you can optimize your distribution center functions, costs, and more.  

What is a distribution center?

A distribution center is a warehouse or industrial building designed to receive, sort, store, and send out products. It’s essentially a storing/sorting center and the last destination before products are sent out to retailers, wholesalers, or directly to customers. 

What is distribution center management?

Distribution center management includes everything from inventory management, product sorting practices, fleet management, sales strategies, employee safety, data management, and more. Robust distribution center strategies require robust technologies that can integrate all the moving pieces of your distribution center into one, all-encompassing platform. 

The importance of distribution centers and inventory management for businesses

Distribution centers, as we’ll get to below, carry out a lot of different functions. You need a well-maintained distribution center management strategy in order to keep those various pieces working efficiently and effectively. 

Without the proper procedures, practices, and managerial processes in place, you run the risk of losing or breaking products, injuring employees, sending out incorrect orders, slowing down your drivers, and a host of other problems. 

What are distribution center functions?

So what exactly does a distribution center do? Let’s get some of the major distribution center functions. 

• DC's receive and store products. Unless you’re also a supplier or DSD business, you’ll likely receive products and inventory from a number of different companies that you have to store and manage in your facility. 
• Part of storing products means protecting them. Maintaining products from weather issues, refrigeration needs, and other product-specific quality control methods will be a necessity. 
• You also have to sort and organize products. This may not seem difficult, but with the rise of e-commerce and individualized orders, we’re seeing more and more individual orders and mixed-palette orders that make it more difficult to keep your inventory organized. 
• Distribution centers need to track and manage their fleets. Whether you’re managing a handful or dozens of vehicles, fleet management ensures drivers are on the quickest, safest, and most cost-effective routes. 
• When you deliver product, drivers are expected to stock, price, and display promotions. They’ll also be expected to return any expired products and manage the amount of inventory needed on store shelves. 
  
  

Challenges in distribution center management

The challenges of a distribution center can be broken down into two categories: Day-to-day operations, and second, managing your system and data. 

The day-to-day operations of managing a DC include things like maintaining your staffing needs, expanding your product and customer base, maintaining your vehicles and warehouse equipment, organizing inventory, tracking routes, and other in-house needs. 

Each of these aspects has its own unique challenges. Ensuring you don’t lose or break products, looking after your drivers’ safety and wellbeing, maintaining the quality of your products with retailers, and tracking drivers to make sure your orders are on-time are all things you need to be aware of as a supplier and distributor. 

Managing your system and data comes down to picking the right system and using it to its full capacity. Distribution center and warehouse management systems are designed to make your job easier. They should be intuitive and all-in-one platforms that simplify the complexity of managing a distribution center. 

Understanding distribution center costs

As a supplier, there are a number of benefits to managing your own distribution center. You get to control your supply chain lifecycle from start to finish, and you can get products out quicker and faster than if you went through a separate distribution center. Additionally, you don’t need to make any outsourcing costs through a third-party distributor. You have more capabilities to grow sales, analyze data, manage your own fleet, and control your product. 

At the same time, however, all of these things take time, planning, and money. Your potential to grow increases, but so do your responsibilities. Let’s take a look at some of the major costs associated with distribution centers. 

Again, we can break these costs down into day-to-day operations and your data management needs. As both a supplier and distributor, you take on pretty much all of the overhead associated with warehouses, manufacturers, and distribution. A simple way to break this down is warehouse rent + daily operational costs + software costs = monthly rate. 

Distribution center best practices

Below are some essential best practices that can help you increase sales, cut costs, boost efficiency, and seamlessly run your distribution center. 

• Make sure employees are well-trained and well-prepared for their tasks. 
• Improve travel time and streamline the picking process by leveraging advanced map routing. 
• Integrate and synchronize all of your real-time data. Synchronized data will help provide more visibility between your inventory, day-to-day demand, and other warehouse data.
• An advanced distribution center software will allow you to track every aspect of the supply chain. You can handle more customers and more fast-moving products by keeping tabs on the fluctuation of inventory with your retailers. 
• Utilize automation where possible and integrate data automation analytical tools. Data automation analysis can help you to create long-term distribution strategies based on the information of where and how effectively your products are selling. 
  
  

Final Thoughts: Beyond Distribution Center Management

As a supplier and distribution center, investing in the right tools to give you control of the most important aspects of your business will be key to having a successful operation, and an important tool to consider is Distribution Center Management Software.  Additionally, you will want to consider other tools that integrate your DC operations with the field distribution process.  For example, and end-to-end route accounting software like Prism Visual Software will manage your field distribution cycle and sync the inventory data with your DC management tool, so that your inventory is always accurate.  This integration will give management a broad and more precise view of the company's full operations, allowing the teams to plan smarter and make better strategic business decisions.