Page 49 - DMGT553_RETAIL_STORE_MANAGEMENT

Retail Store Management

Notes 3.3 Concept of Distribution Centre

A distribution centre for a set of products is a warehouse or other specialized building, often
with refrigeration or air conditioning, which is stocked with products (goods) to be redistributed
to retailers, to wholesalers, or directly to consumers. A distribution centre is a principal part, the
order processing element, of the entire order fulfilment process. Distribution centres are usually
thought of as being demand driven. A distribution centre can also be called a warehouse, a DC,
a fulfilment centre, a cross-dock facility, a bulk break centre, and a package handling centre. The
name by which the distribution centre is known is commonly based on the purpose of the
operation. For example a “retail distribution centre” normally distributes goods to retail stores,
an “order fulfilment centre” commonly distributes goods directly to consumers, and a cross-
dock facility stores little or no product but distributes goods to other destinations.

Distribution centres are the foundation of a supply network, as they allow a single location to
stock a vast number of products. Some organizations operate both retail distribution and direct-
to-consumer out of a single facility, sharing space, equipment, labour resources, and inventory
as applicable.

Figure 3.1: Distribution Centre

Source: http://en.wikipedia.org/wiki/File:Distribution_centre_(J_Sainsbury%27s).jpg
A typical retail distribution network operates with centres set up throughout a commercial
market, with each centre serving a number of stores. Large distribution centres for companies
such as Wal-Mart serve 50–125 stores. Suppliers ship truckloads of products to the distribution
centre, which stores the product until needed by the retail location and ships the proper quantity.

Since a large retailer might sell tens of thousands of products from thousands of vendors,
it would be impossibly inefficient to ship each product directly from each vendor to each store.
Many retailers own and run their own distribution networks, while smaller retailers may
outsource this function to dedicated logistics firms that coordinate the distribution of products
for a number of companies. A distribution centre can be co-located at a logistics centre
In contrast to traditional warehouses, a modern distribution centre is essentially an operations
centre, managing the flow of information and goods between retailers and suppliers through
the use of standardized bar codes, high-speed conveyors, laser scanners, and computerized
databases.

Task Visit different distribution centres and analyze their functioning.

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