The supply chain and logistics landscape are continually changing, making it important for companies to keep up with the latest trends and technologies. One such trend that is providing numerous benefits to supply chain companies is warehouse cross docking. But what is cross docking, exactly? And what are the pros and cons of adopting this practice?
A cross docking solution with built-in quality assurance checks aids in overall customer satisfaction by allowing warehouse staff to sort and distribute items as ordered, rather than having to dedicate large amounts of space in the warehouse to storing products in bulk to be placed in storage.
In many cases, cross docking results in leaner, more streamlined supply chains. However, it is not always a net benefit. In some situations, traditional warehousing is a safer and more efficient option.
Keep reading to learn about the pros and cons of cross docking and if it is the right strategy for your business.
What is Cross Docking?
Cross docking is a logistics method in which goods are transferred directly from an incoming transportation vehicle to an outgoing transportation vehicle with minimal handling and storage in between. Products are delivered to a warehouse where they are sorted and prepared for shipment immediately – usually being reloaded onto other trucks stationed at the same warehouse.
The goal of cross docking is to reduce handling and storage costs, as well as improve the efficiency and speed of the supply chain. Automation can help with cross docking by streamlining and simplifying the process, reducing human error, and increasing the speed and accuracy of the transfer of goods.
Benefits of Cross Docking to Supply Chain Companies
There are many benefits that supply chain companies may achieve when implementing a cross docking process, including:
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Reduced Transit Times
Cross-dock operations not only boost efficiency by eliminating unnecessary touches, but distribution centers are strategically located near customers for timely dispatch and delivery. With faster dispatch and delivery, businesses can achieve improved customer satisfaction.
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Cost Savings
By cutting back unnecessary warehousing operations, businesses can reduce expenditures on warehouse real-estate and the associated costs, including climate control, lighting, maintenance, and labor costs. In addition, by delivering products in a just-in-time fashion, businesses avoid the age-old problem of inventory depreciation.
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Reduced Space Requirements
When using a cross-dock setup, you will need significantly less space to actually store products, since few items remain in the facility for long. Thus, smaller leases can lead to notable savings, particularly in high-demand, supply-constrained markets.
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Improved Customer Satisfaction
Cross docking can also improve customer service by reducing lead times and increasing order accuracy. This is because once products arrive on incoming transport, they are sorted and loaded directly onto outbound trucks without being stored in the warehouse first. As a result, products can be delivered to customers more quickly and often with fewer errors.
Potential Challenges and Drawbacks of Cross Docking
Despite the many advantages of cross docking, there are also some drawbacks to consider. These aren’t all negatives, but they are potential challenges that companies should be aware of when considering cross docking.
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Requires Close Coordination
Cross dock service requires in-depth planning and supplier coordination, as it involves various considerations, such as supply-demand analysis, shipment schedules, and more. Without proper planning and execution, there is a high probability the efficiency and reliability of the cross dock system can be negatively impacted.
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May Not Be Suitable for All Products
Cross docking may not be suitable for all products. For example, cross docking may not be suitable for products that are high in value or require special handling.
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Requires Sufficient Transport Carriers
A cross dock facility relies heavily on its transport carriers since goods are shipped promptly and not put in storage. As a result, there is a need for a sufficient number of transportation carriers to ensure the smooth and efficient functioning of the cross dock system.
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Can Be Challenging for Small Companies
Cross docking can be challenging for small companies since it requires close coordination and real-time visibility. These can be difficult to achieve if you don’t have the right technology or enough staff.
Types of Cross Docking: Pre-Distribution and Post-Distribution
There are two main types of cross docking being used in warehouses today: pre-distribution cross docking and post-distribution cross docking.
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Pre-Distribution Cross Docking
Pre-distribution cross docking is usually done earlier in the supply chain or is done by companies with vertically integrated supply chains. Under this method, goods are sorted and loaded before they leave the supplier, and already have customer delivery instructions.
A subcategory of this method is manufacturing cross docking. In manufacturing cross docking, a manufacturer receives and sorts parts and builds products or sub-assemblies for dispatch further down the supply chain.
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Post-Distribution Cross Docking
In the Post-Distribution process, sorting is deferred until the proper facility and customers are chosen, based on demand. That means that goods spend a little more time in the distribution or cross docking facility, but retailers and suppliers benefit from the additional time to make smarter, more informed decisions about where to ship their goods based on in-store inventory, sales forecasts, and point of sale trends.
Three Common Methods of Cross Docking
In terms of the strategy employed, there are a few common methods of cross docking used in warehouses today. These methods include:
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Continuous Cross Docking
With 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 shipments in case of events like trucks arriving at different times at the facility.
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Consolidation Arrangements
The consolidation arrangement method combines multiple small shipments before transportation. The items are temporarily kept in a terminal warehouse until they are shipped out of the facility in full truckloads.
Consolidation arrangements are made so that more space is available for storage. They also increase efficiency as cross docking facilities need to handle fewer shipments. Consolidation arrangements also reduce the number of shipments, which can increase customer satisfaction through lower freight costs associated with each shipment.
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De-Consolidation Arrangements
As suggested by the name, this is just the opposite of consolidation cross docking. The warehouse receives full shipments from one or more suppliers or production centers. They are then broken down and re-labeled. Following this process, the products are deposited in new unit loads and moved to the loading docks to be consolidated on the various transport vehicles.
When Should Cross Docking Be Used?
Cross docking streamlines the transfer of goods in distribution centers and warehouses. Warehouse managers can use the technique to move pallets of goods from one transportation mode to another. It is also useful for the consolidation or deconsolidation of merchandise or to prepare materials for use in manufacturing. In eCommerce fulfillment, cross docking reduces the time it takes for products to travel from the receiving dock to the outbound dock, often for processing backorders.
Here are a few scenarios in which employing a cross docking strategy can be especially beneficial:
- When demand for a product is relatively stable. This enables you to establish a recurring fulfillment schedule that takes advantage of the efficiencies of cross docking, and then make small adjustments as demand shifts over time.
- When you are shipping temperature-sensitive items. Many providers of cross docking services have both climate-controlled warehousing space (including temperature-controlled docks) and reefer trailers to keep your temperature-sensitive products within spec every step of the way.
- When you know you can rely on your supply chain partners. If you rely on suppliers to meet their deadlines in order for you to meet yours, a cross docking strategy can be riskier. If you know you can count on your suppliers to make their deliveries on time, cross docking carries much less risk.
- When your truck is overweight. If your vehicle is overweight or over-axle weight, a cross dock services provider can shift your load or unload items to keep you compliant.
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.