What is the difference between a traditional warehouse and a logistics center?

8 August 2022

The pressure for fast deliveries has led companies to develop new strategies to speed up intralogistics processes and reduce distances from customers.

Since most organizations have distribution centers located in industrial areas, far from cities, many of them have already started adopting the logistics center format, achieving good results from the investment.

The definition of the ideal strategy to ensure the best customer service, in fact, will greatly depend on the type of business.

It’s important to make an agile delivery, but it’s equally crucial to have all the stock available, so it’s necessary to understand well the nuances and details that differentiate a traditional warehouse from a logistics center and, therefore, choose what will bring the best delivery results.

What is a warehouse?

The warehouse is defined as a place mainly intended for the storage of goods, being used not only by manufacturers but also by wholesalers, retailers, e-commerce companies, logistics operators, etc. Warehouses generally have a vast area and are usually located in industrial parks on the outskirts of a city.

Most warehouses have docks that facilitate the loading and unloading of trucks. The shape, size, and function of a warehouse are, in part, determined by the type of inventory it hosts, however, there are some fundamental and common elements, such as:

Shelves suitable for storing goods.
Equipment to lift heavier objects and move them from one place to another (e.g., forklift, pallet jack, etc.).
Equipment for transporting objects.
Pickers and loaders to assist with order fulfillment.
Areas for receiving, storing, and shipping goods.

What is a logistics center?

The logistics center is a place primarily intended for processing and fulfilling customer orders. In this format, products are stored for short periods until shipment. This type of operation is designed to offer fast and cost-effective order fulfillment, meaning its mission is to deliver products to customers as quickly as possible.

It is common for large retailers to have two formats – warehouse and logistics center – with the former supplying the latter and the latter handling order deliveries. In this case, the warehouse does not serve external customers. This mission is exclusive to the logistics center.

In general, the logistics center is located within the city, being closer to customers, and works at an intense pace, with employees sorting items, packing and labeling orders, shipping packages, and handling returns. In the pursuit of agility in the process, it is frequent for companies to invest in technologies and automatic systems, managing, with innovations, to make same-day deliveries.

Warehouse vs. logistics center: main differences

Now that you know the specifics of each, let’s list the main differences to make it even clearer:

Unlike the warehouse, the logistics center exclusively serves B2C customers, whose orders are placed through e-commerce, telesales, or similar channels.
In general, in a warehouse, stocks enter and exit on a transport pallet, meaning in large loads. At the logistics center, goods arrive on pallets and leave in individual shipments.
While in a warehouse the main goal is to store goods long-term, managing their entry, internal movements, and exit, in the logistics center the aim is to fulfill received orders in an agile and efficient manner.

Is it worth investing in a logistics center?

If your company already has e-commerce or telesales channels, for example, it might be very interesting to invest in a logistics center so that it can make deliveries within 24 or 48 hours. Amazon, which is a great reference in terms of logistical efficiency, has invested in this format and has dominated the American market by offering extremely fast deliveries. In the United States alone, there are 110 logistics centers, and worldwide the figure reaches 185.