Warehouse Distribution: Key Concepts for Modern Businesses

Warehouse distribution is not a behind-the-scenes process—it's the core of companies’ efforts to meet rising consumer expectations for speed and accuracy.

By 2040, 95% of purchases will be made online. Ecommerce businesses (like yours) will need an efficient system to keep up with demand while leaving time for marketing, customer relations, and business operations. This is where warehouse distribution comes in.

Instead of handling the putaway, storage, picking, packing, and shipping for your goods on your own, you can leverage warehouse distribution via on-demand warehousing, third-party logistics (3PL) providers, and/or fourth-party logistics (4PL) networks to manage your inventory, take care of warehouse operations and transportation management, and speed up order fulfillment. But how do you know if this is the right next step for your supply chain—and your business?

In this blog, we'll explore the ins and outs of warehouse distribution—what it means, how it works, its benefits, and tips to optimize it properly. By the end, you'll have a solid understanding of warehouse distribution and if it's the right next step for scaling your business.

Warehouse distribution can also involve using a mix of different types of warehouses. Traditional warehouses are typically used for storing products until they are needed, which can be long term. On the other hand, distribution warehouses are customized warehouses focusing on short-term storage and the fast movement of goods, getting inventory from suppliers to customers as quickly and efficiently as possible. They store products, process orders, and ship out products, typically working with retailers/wholesalers to streamline the order fulfillment process and redistribute goods in bulk.

Distribution and fulfillment centers can also come into play. While distribution centers do store products, they also frequently perform cross-docking,  product mixing, order fulfillment, and packaging. Fulfillment centers focus on direct-to-consumer order processing. They pick, pack, and ship individual orders—prioritizing fast, accurate deliveries facilitated by integration with multiple sales platforms to manage orders and returns efficiently.

Tips & Best Practices for Effective Warehouse Distribution Processes

Running an effective warehouse distribution system is more than storing goods on shelves; it's about optimizing every step of the supply chain process for accuracy, efficiency, and cost-effectiveness.

Here are some best practices you should implement to create a seamless warehouse distribution process:

Invest in a Warehouse Management System

Investing in a warehouse management system (WMS) is a smart move for businesses who want to boost operational efficiency and save time. A WMS automates tasks like inventory tracking, order processing, and shipping management. This reduces manual labor and reduces errors, speeding up the entire distribution workflow.

For every hour you spend automating your warehouse, it'll save easily 10 hours a week depending on your volume. And that's ten hours every week forever. And as you scale, it magnifies.

Patrick Barnhill
President and Co-Founder of Specialist ID

Extensiv's software, for example, provides real-time data on key warehouse distribution metrics like inventory levels, order status, and shipment tracking across multiple locations to understand how efficiently your distribution warehouse strategy is running. This allows businesses to always know how much stock they have, where it's stored, and what's been shipped.

More importantly, regular tracking will help you know what's working and what needs work as you start and grow your warehousing operations.

Optimize Your Warehouse Layout

A well-optimized warehouse is like a well-oiled machine. The easier it is to navigate your warehouse, the faster distribution flows. Set up your warehouse distribution center in ways that give pickers easy access to high-demand products. For instance, if you sell stationery items, in December, your Christmas cards should be “front and center,” but the rest of the year, you can store them safely out of sight, out of mind, on a high shelf.

Keep the Right Amount of Inventory

There’s an overwhelming abundance of inventory management tips and advice you can find, but it all boils down to one key concept: balance. Stocking too little can lead to stockouts, causing delays and disappointed customers when products are unavailable. On the other hand, overstocking ties up valuable storage space and costs, leaving you with excess stock that may not sell.

Extensiv's inventory management solution helps brands find the right balance by providing real-time visibility into inventory levels across all warehouse so you can prevent stockouts and avoid overstocking. It also integrates with shipping systems, improving inventory accuracy across all stages of the supply chain and helping businesses save time.

Choose the Right Warehouse Distribution Partner

To choose the right warehouse distribution partner, assess the experience of your potential partners in handling your product. You’ll want to check if they have the right equipment, technology, and incorporate a warehouse quality control process. A strong distribution network that aligns with your shipping locations and speed requirements is what you’re looking for, and most importantly, a partner that can scale with you as your business grows.

Directories like Extensiv’s Fulfillment Marketplace are a great place to start researching providers in your target geographies and industry.

Set Up a Vendor Compliance Program

As a business owner, ensuring your suppliers meet your standards is key to maintaining smooth operations. A vendor compliance program is a set of standards brands establish for their your partners to follow, covering areas like packaging, labeling, shipping requirements, and delivery SLAs, which are critical as same day delivery is gradually replacing two-day shipping as the new gold standard of consumer expectations. By holding your vendors accountable to these standards, you can avoid disruptions and keep your supply chain running efficiently.

Try Cross-Docking

Cross-docking is a process where goods arriving at the warehouse distribution center are immediately moved from incoming trucks to outgoing trucks, without being stored. This reduces storage time and cost and helps speed up delivery to customers. Cross-docking is especially useful for businesses handling perishable goods or those needing quick turnaround times.

Using Extensiv to Make the Most of Your Warehouse Distribution Processes

Before deciding on the warehousing and fulfillment strategy that’s best for your brand, consider important factors like your business model and shipping and storage needs. Regardless of your final decision, Extensiv’s solutions for brands provide the flexibility to optimize your operations, offering tools that will allow your brand to manage bulk shipments efficiently while ensuring fast, accurate fulfillment for individual orders.

Extensiv's order management platform offers real-time inventory tracking, automates order routing, and integrates across multiple sales platforms, helping you streamline order fulfillment.

And when you’re looking for new logistics partners, Extensiv's Fulfillment Marketplace allows you to connect with 3PL partners easily, enabling you to scale your operations while maintaining efficiency in both bulk and individual order fulfillment.

Want to learn more about how Extensiv can help you take the next step in building a warehouse distribution strategy to fuel your business growth? Request a demo today!