Logistics is that part of supply chain management that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements. It is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost.
There are many elements that play key roles within a logistical structure, for example, prices and volumes are reviewed to make sure they fulfill what it is being required. Quality assurance deals with the precision of what is being acquired and shipping and handling regulates and control the time that takes to move the items from the shipping point to the delivery point.
Logistics play a crucial role to ensure high levels of productivity, since it can reduce the time it takes to get what is being demanded in the hand of those that are manufacturing or delivering the goods and services to the final customers.
Cross-docking is the direct transfer of products from inbound to outbound shipping with little or no storage space between the two. However, cross-docking also provides warehouse management services if needed. Thus, cross-docking effectively promotes logistics, significantly improving retailer supply chain efficiency and processing time. So, what is cross-docking?
Here, we will explain the definition, classification and application of cross-docking to your supply chain process.
What is Cross Docking?
Cross Docking is a lean supply chain model that involves the immediate or faster transfer of finished goods directly from suppliers or manufacturers to customers or retailers with little to no handling or storage (e.g., stopping a truck at a distribution center to put it on another truck without storing the inventory inside the warehouse).
This might mean unloading cargo containers that arrive directly to a warehouse by rail line and loading transport trucks for outbound distribution. It could be receiving product in dry-vans and transferring it to flat-deck for job site unloading. Whatever the method of conveyance, cross docking offers the flexibility to design an effective supply chain for any business requirement.
Cross Docking Types
There are two main types of Cross Docking:
- Pre-distribution – Goods are unloaded, sorted, and repackaged based on predetermined distribution instructions. In this method, inventory spends very little time at the Cross Docking warehouse. It is best suited for retailers that manage their own warehouses and have direct insights into all of their own customer and supplier relations.
- Post-distribution – Goods are stored in the Cross Docking facility until the next leg of the journey is clear. This type of service would result in inventory staying at the Cross Docking warehouse for a slightly longer period of time. With this method, distributors and retailers get to take the time needed to strategically decide which location to ship the inventory to based on inventory forecasting numbers and current inventory counts.
Cross Docking Methods
Here is a look at a few of the ways Cross Docking can be performed:
- Continuous Cross Docking – There is a non-stop and direct flow of inventory through a Cross Docking facility from inbound to outbound shipments. Continuous Cross Docking results in short waiting periods between unloading and loading of shipments in case of events like trucks arriving at different times at the facility.
- Consolidation – Involves the merging of many small shipments into one larger load before being shipped out. This is beneficial since it is not always profitable to ship out each small parcel individually from the Cross Docking facility. With this method, the goods do need to be temporarily stored at the warehouse until they form full truckload shipments (most likely in a staging area and not with other inventory). But, the benefit lies in the fact that it helps reduce shipping costs.
- De-consolidation – This approach is the opposite of the consolidation arrangement method. With de-consolidation, the large load is broken down into smaller batches to make it easier and quicker to transport to customers. This is method is typically used in direct-to-consumer fulfillment.
Where is Cross Docking Most Beneficial?
The benefits of Cross Docking as an operational system can be had in almost any industry. However, it is particularly important in the following industries:
- Food and Beverage – Restaurants require a continuous and reliable stream of goods to operate efficiently. Cross Docking also reduces the likelihood that foods will spoil in transit since they are not stored for long periods.
- Retail and eCommerce –Cross Docking can move items quickly and reduce instances of low or no inventory.
- Chemicals – The shipment of chemicals can be expensive and dangerous and as a result, inventory should be handled as little as possible. This makes chemical shipments ideally suited to Cross Docking.
Overall, there are several main benefits to incorporating cross-docking into your retail supply chain. Because products are spending less (or no) time in the warehouse, inventory handling, and storage costs are greatly reduced.
Additionally, goods typically reach their final destination (i.e. the customer) much faster, giving the retailer a competitive edge. Storage space is minimal, and everything is carefully arranged according to incoming and outgoing shipments.
- Reduce labor costs as one team can handle warehousing and shipping quickly
- Eliminate inventory holding costs
- Minimize excess inventory for better inventory management
- Deliver products to customers faster
- Streamline supply chains, from the point of origin to the point of sale
- Reduce the risk of damage during the handling phase
The FLEX Logistics Team is Here to Help!
The primary goal is to deliver any order at any cost. On occasion, this might even be done through individual shipments. Therefore, flexible fulfillment has become a logistics strategy seen more often in firms in sectors as diverse as the consumer goods, food and retail industries. It is time for your distribution centers to work in unison to deliver more orders.
Make fulfillment stress-free for your customers, and win both new and repeat business. This past year saw a number of customer engagement trends accelerate. E-Commerce took off as consumers became comfortable shopping for more, and more types of, goods from their homes. Manufacturers learned how to sell directly to consumers, and many traditional retailers doubled down on their already effective omnichannel approaches.
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.