4 Ways to optimize distribution center operations

Distribution centers have experienced a surge in growth in the last few years, with leasing transactions surpassing one million sq. ft in the U.S. in 2021.

But like all other segments in the supply chain, distribution networks are seeing a significant shift in the industry’s landscape. Accelerated technology, increased competition, and changing business models are just some of the factors reshaping the way goods are distributed. 

For distribution centers to successfully navigate these significant developments, it requires quickly responding to market needs and optimizing operations to deliver the most value. 

Key processes in a distribution center

Distribution centers are integral to the fulfillment process, serving as a bridge between manufacturers and wholesalers or retailers. 

In contrast to traditional fulfillment warehouses, which simply store inventory, third-party distribution centers focus on wholesale and larger inventory quantities. They also offer a range of value-added services, such as product repacking or replenishment, ecommerce fulfillment services, and coordinating with other logistics providers along the supply chain. 

Here are the four key processes that take place in standard wholesale distribution centers: 

Receive inbound inventory

A key process in all fulfillment services is receiving and unloading inbound goods. Distribution centers typically deal with larger freight shipments from manufacturers, which entails detailed documentation and quality assurance inspection. 

This initial step ensures that the correct products in the correct quantity and condition are received before being stored in the warehouse.

Organize and manage inventory 

Once an inbound shipment is accepted, the distributor is now accountable for the inventory. The putaway process stores all the inventory in the most optimal location in the warehouse, taking into account the item size and quantity, daily workflow, and maximum space utilization. 

Storing wholesale inventory in large quantities involves using heavy equipment, such as forklifts, pallet jacks, conveyors, and carts, to unload and transport the items to designated areas in the warehouse. 

With QuickBooks Enterprise you can create custom pick lists that warehouse workers can use to organize inventory by lot and serial number across multiple warehouses.

Order picking and packing 

Distribution centers follow a similar order picking process to other fulfillment warehouses, with the exception of wholesale distributors dealing with much larger order sizes. 

For example, an order can consist of several cases or truckloads sent to a single retail location. Some customer orders may additionally require bulk breaking or kitting services, where items are divided or combined, respectively, before being delivered as a new SKU to the next destination. 

QuickBooks Enterprise helps you fulfill orders faster by sending pick, pack, and ship instructions to mobile barcode scanners.

Sending outbound inventory 

Distribution centers are responsible for sending shipments to wholesalers, retailers, or another fulfillment center along the supply chain. Outbound inventory involves completing paperwork and properly labeling each shipment that leaves the warehouse. 

Furthermore, since distribution centers deal in larger inventory quantities, the processing of all outbound shipments must be as organized and efficient as possible. 

In some cases, inventory may be exported to other countries. Extensive transportation management can involve additional stops and communication with third-party logistics services to ensure all items are received in the proper time frame.

QuickBooks Enterprise helps you optimize and automate inventory management from the warehouse to your customer’s doorstep to create more happy customers.

4 Ways to optimize distribution centers

With the high demand for wholesale distribution centers, several new strategies have developed to ensure efficient operations and adaptability in the market. The following are some of the best practices a distribution center should adopt to move forward in the industry.

Streamline inventory and warehouse operations 

Each step in the distribution process is made more challenging when dealing with wholesale quantities. To simplify these complexities, it’s best to monitor all aspects of operations — from storage space capacity to average picking times — and understand where improvements can be made.

By taking actions to streamline every step in both inventory and warehousing operations, a distribution center can better achieve maximum efficiency.

Increase efficiency with barcode scanning

Fulfill your sales orders faster using pick/pack instructions to mobile barcode scanners with QuickBooks Enterprise. You can track your inventory down to the bin or pallet across staging areas and multiple warehouses. You can also use barcode scanning for picking, receiving, and cycle count inventory updates.

Properly manage and train staff 

With so many moving parts in a distribution center, proper warehouse management helps reduce the likelihood of errors and inefficiencies. It’s important to determine all the labor, equipment, and square feet needed at every stage and ensure these resources are properly allocated when needed.

All warehouse workers should also be adequately trained to ensure inventory is properly handled and stored in the right location and maintain warehouse safety, especially when using heavy equipment.

By combining historical inventory analysis with sales forecasts, a company can project its upcoming deliveries and prepare enough resources to meet the market demand. 

Leverage automation

Distribution centers that use inventory management systems can leverage their existing data to gain insights and competitive advantages. Automations can be accurately set based on this in-house data to create more efficient operations. 

Any notable changes in subsequent reporting can indicate a need to address a specific area of operations or rising customer demand.

How QuickBooks can optimize your distribution business

QuickBooks Enterprise helps wholesale distribution businesses to seamlessly adapt to these changes by optimizing all areas of operations, including shipment and inventory tracking, omnichannel sales, and order fulfillment.

Distributors can track the quantity and location of all inventory across multiple centers, up to the exact pallet, shelf, and even storage bin. Any items that need to be picked, packed, or shipped can be instantly managed from a single dashboard. 

At a glance, distributors can see their overall profitability and future demand forecast. They also get reports and critical insights designed specifically for wholesale distribution and supply chain management. This allows companies to determine what’s working and what needs improvement, as well as discover any gaps or opportunities in the services it provides. 

In the ever-changing industry, the distributors that are able to adapt and become more customer-centric will ultimately be the most successful in the long run.

Final thoughts

To optimize their operations and remain competitive in the industry, wholesale distribution centers need to actively monitor all warehouse activities. 

Start by setting a clear system for all order processing, and then use warehouse management software to automate tracking and real-time updates. Streamlining routine tasks helps reduce the warehouse workload and makes it easier to find areas of opportunities and quickly respond to the market's changing needs.