Distribution center

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Distribution center of a discounter chain on the outskirts of Berlin

A distribution center is responsible for an efficient and rapid flow of materials from the company to the customer and enables the company to remain competitive in a global environment. The function of distribution logistics is therefore to connect the company's production with its customers and includes all activities associated with supplying customers with semi-finished and finished products and merchandise. A distribution center represents a possibility to realize the material flow in this sense.

Distribution center tasks

  • Settlement of deadlines
  • Quantity balancing
  • economics
  • Profit maximization
  • Quality improvement

Functional areas of a distribution center

  • Yard management
  • Goods Receipt
  • camp
  • Picking
  • Consolidation and Packaging
  • Outgoing goods

The central processing of the tasks enables a distribution center not only to reduce the volume of transport, but also to offer purchasing advantages. This creates benefits for both the consumer and the company. Possible advantages that result from the use of a distribution center for the consumer are, for example, a higher delivery speed, low stock gaps on the shelves and a large selection of goods.

For the company, on the other hand, the focus is on cost savings, more efficient goods handling due to shorter throughput times, reduction of stocks, maintenance of the availability of goods and faster delivery times. Although there are numerous advantages associated with a distribution center, there are also potential disadvantages.

Disadvantages for the company are, for example, ignorance of the requirements of the consumer, more complex material handling as well as more complex entry controls, clumsiness, bureaucratisation, delay and the risk of a monopoly of the distribution center. Probably one of the main disadvantages of the distribution center lies in its actual nature - the central processing of incoming and outgoing goods for a large number of retail stores. This centralization makes the retail stores dependent on the distribution center. If the distribution center fails, not only one business - in the event that it has its own distribution department - but all businesses that purchase goods from this distribution center are at risk. A current example of such a case can be found in the devastating Hurricane Rita on the Gulf Coast of the United States.

Practical examples

  • Wal Mart Germany

This company used two distribution centers for its former 89 supercenters in Germany in order to have the right product, at the right time, in the right place for the consumer. Wal-Mart Germany's logistics strategies were based on the one hand in a low inventory level and on the other in so-called cross docking . The goods were handled directly in the distribution center and picked onto pallets specific to the house. These were then immediately delivered to the individual stores.

  • Intermarché

This company operates 350 distribution centers that handle everything from frozen foods to consumer electronics and deliver these items to over 3,500 retail locations across France. In order to ensure efficient performance of the distribution centers, they were equipped with a new and powerful logistics and inventory management system.

Process of distribution

The process of distribution is illustrated by Intermarché and starts at the unloading ramp. There the incoming goods are scanned and compared with the orders. With the help of Intermec's wireless data acquisition, Intermarché has a complete overview of the movement of items throughout the supply chain when stowing in warehouses, picking for shop orders, loading trucks and managing delivery routes . The wireless terminals reduce the administrative burden and improve working conditions and operator safety, because one of the greatest risks of injury is eliminated: tangling in cables. In combination with the INFOLOG software, the devices put an end to storage errors at all goods turnover points.

Summary

In the context of globalization, a distribution center is becoming more and more important. Having a center in every country is an outdated strategy from today's perspective. Rather, large centers that can supply several countries have to be built in locations with favorable transport connections. Northern Europe is opened up via Sweden, northern continental Europe via Belgium and southern Europe via southern France. The Saarland is also gaining increasing importance as the headquarters for distribution centers, as its central location means that it is able to supply all of Europe quickly and cheaply. In Asia, Singapore is often chosen as the location for supplying all of Southeast Asia. With the help of a distribution center, economic advantages can be achieved that allow the company to remain competitive today.

literature

  • C. Grießenberger, K. Kuzmany, S. Zechmann-Hamidi: Marketing decisions in international business . 3. Edition. Vienna 2005.

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