Everything Business Owners Should Know About Sortation Centers and Fulfillment Centers

‍Supply Chain Management vs. Logistics

You already know that the logistics and supply chain landscape is complex. It involves numerous stages, from sourcing materials to delivering products to your customers' doorsteps. It's important for business owners to know the differences between logistics and supply chain management. The Council of Supply Chain Management Professionals states that "supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities." 

Sortation Centers

Packages arriving from different fulfillment centers need to get sorted and grouped before they're delivered to the correct locations. That's where sortation centers come in. They streamline this process by making sure each package ends up where it needs to be. They sort packages before the final leg of their journey, ensuring that they are organized neatly by location so they can be delivered quickly and efficiently. 

Think of sortation centers as the final stop before products make it to your customers' doorsteps. 

Who Uses Sortation Centers?

Companies like Target use sortation centers to organize and deliver items ordered from local stores. Of course, Amazon has sortation centers, as well, where packages purchased online are stored for a short time before they're sorted and sent.

Fulfillment Centers

Fulfillment centers like All Points Logistics provide a centralized warehouse space where you can store inventory, process orders, and package shipments for delivery. We ensure that all orders comply with packaging standards for even the strictest companies. 

Who Uses Fulfillment Centers?

Any company can use a fulfillment center, and many small businesses often do, including those who sell via online sales platforms like Amazon and Shopify. Fulfillment centers are often necessary for large organizations that require storage and shipping services for copious amounts of material. Suppliers can send inventory directly to fulfillment centers, which then organize the material for quick packaging and transportation once purchased. 

Key Differences Between Sortation Centers and Fulfillment Centers

Although sortation centers and fulfillment centers play essential roles in supply chain logistics, they have some differences that set them apart from each other.

Operations, Technology, and Employees

When it comes to operations, sortation centers focus on sorting and routing packages, while fulfillment centers handle order processing and shipment preparation. Sortation centers use conveyor systems and automated equipment. Fulfillment centers use packing stations to streamline order fulfillment. Sortation centers require skilled logisticians to deliver packages to the correct customer, while fulfillment centers require warehouse staff such as forklift drivers, packers, and clerks. 

Impact on Delivery Speed and Customer Satisfaction?

sortation centers contribute to the shipping process by sorting packages efficiently, and fulfillment centers ensure orders are processed accurately and shipped out quickly, ultimately enhancing customer satisfaction. 

By optimizing sorting and processing, sortation and fulfillment centers contribute to faster delivery times and happier customers. Sortation centers are somewhat less impactful when it comes to delivery speed because arriving packages are already packed and labeled. They only need to be sorted and transported. 

Fulfillment centers, on the other hand, can have a significant impact on the speed of shipping and overall order processing because they are responsible for portions of the system that require a strong attention to detail. A fulfillment center must be organized enough to quickly find the right items within a large collection of inventories, package them quickly and securely, and send them to the correct location center. 

Fulfillment centers often also have specific instructions from individual sellers, such as including sales fliers or inserts inside the packaging. Keeping track of all these moving parts requires an immense amount of organization, so your choice of fulfillment center can make a large impact on your business endeavors.  

Roles in Supply Chain and Logistics

The supply chain management system consists of five stages: 

• Planning

• Sourcing

• Manufacturing

• Delivery

• Returns

While sortation centers are only involved in the delivery portion of this process, fulfillment centers take part in both delivery and returns. While they don't deal in manufacturing, they can accept deliveries at their warehouses directly from manufacturers. 

When it comes to returns, your customers will send their packages directly back to the fulfillment center, which will then repackage the product and return it to their inventory.

Cost Implications for Business

While fulfillment centers have ongoing operational costs, they are essential for meeting customer demands. You may have a large demand for your products, but your business can only grow when you have an infrastructure in place to meet that demand and send goods to customers. 

With the help of fulfillment centers, you no longer need to pack boxes on your own or drop them off at the post office yourself. Once your business reaches a certain size, fulfilling these tasks become impractical. Fulfillment centers can fulfill orders on a larger scale, allowing for greater commercial expansion and earnings. 

In the long run, investing in an organized and reliable fulfillment center will help your business grow.

Order Fulfillment Case Study: Amazon

To illustrate the usefulness of fulfillment centers, let's look at a few real-life examples. Over the years, Amazon has invested $100 billion into its delivery service systems, which include both sortation and fulfillment centers. Now it has become known for its quick, efficient shipping and returns. 

Amazon has become a convenient staple of everyday life in the modern era, but would they hold as much influence if their shipping was unreliable? 

People might not see Amazon as a reliable option for everyday use if it took a week or more for Amazon packages to arrive, packages arrived damaged more often than not, or items were sent to the incorrect location. 

Under those circumstances, people might use their service for items that are not too important, or for items from distant places that would be difficult to find otherwise, but it would not be the go-to supplier for the average consumer that it is today. The $100 billion investment that Amazon made has allowed it to grow to an almost infinite level, and its business continues to expand every day.

Future Trends in Sortation and Fulfillment Centers

Technological Advancements

As delivery systems continue to improve, keep an eye out for technological advancements like automation and AI, as well as sustainability practices and evolving consumer expectations to stay ahead of the game in the world of shipping. New developments in the world of logistics are occurring every day, and automated inventory management tracking can increase the accuracy and speed of order fulfillment. Automated machines can also make the packing process easier. 

Speed and sustainability

Amazon is also offering drone delivery services to select locations. This option can send packages to customers within an hour, allowing for shipping speeds that were previously unimaginable. These improvements may cause consumers to increase their expectations when it comes to shipping times in all cases

Customers also have an expectation of ethical and environmental sustainability, however, and ensuring these aspects are part of your supply chain is essential. Due to these considerations, there are a lot of conflicting demands business owners face when planning logistics. Choosing good partners and taking the time to create a sound initial plan can save a lot of headaches in the long run.

Sortation and Fulfillment for Your Business

Sortation and fulfillment centers are key players in optimizing your shipping processes and keeping your customers happy. By understanding their roles and differences, you can create a plan that takes your business to new heights and helps you stay ahead of the competition. 

For further insights into how sortation and fulfillment centers can benefit your business, contact All Points to talk to a professional about options that fit your needs.