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The terms warehouse and distribution center are often used interchangeably. However, these are 2 distinct parts of the overall distribution logistics function. The warehouse offers efficient storage. The distribution center offers a range of order fulfillment functions. The combination of third-party distribution warehousing provides both warehouse and distribution functions in one facility. Namely, a place from which wholesale and retail orders are shipped.

Serving as a core part of a business’ supply chain, the distribution warehouse offers high-tech storage, transportation, cross-docking, order fulfillment, labeling, packaging, and any other services required to complete the order cycle.

An overhead picture of a warehouse representing a cross-docking setup

Combining the warehousing and distribution services functions in 1 location allows companies to operate over a range of distribution models.

Third-Party Distribution Warehousing Models

The following are the most common third-party distribution warehousing models.

Conventional Models

The wholesaler is a customer of the manufacturer, buying goods from the manufacturer in larger wholesale quantities. The wholesaler pays the manufacturer for bulk orders. Goods are shipped to the wholesalers from the third-party distribution warehouse as they are for any other customer. The manufacturer pays the 3PL for its services.

An example of transportation services. An image of a truck docked at a warehouse.

Direct Marketing Models

This active warehousing attitude makes direct factory-to-retail models practical. Direct factory-to-consumer models work by providing comprehensive logistics in 1 facility. The distribution warehouse is not passive but offers a variety of services in addition to storage throughout the distribution process. The manufacturer pays the distribution warehouse, as a client, for a variety of necessary logistical services.

Home-Based Business Models

The distribution warehouse has created new options for start-up, home-based, and online businesses. These types of business models rarely have the infrastructure to store products, fulfill orders, or ship their products. However, these services are available at a distribution warehouse at a manageable cost for small businesses.

CWI Logistics is Your Third-Party Distribution Warehousing Provider

At CWI, we have over 5 decades of experience in product distribution and warehousing. We would love to learn more about your specific needs.

Please contact us today to get started!

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