What is Cross Docking in Supply Chain Management?

What is cross docking?

Cross-docking is a logistics strategy when carrier immediately unloads the cargo from an incoming container and then loads it directly to an outbound carrier. It is a practice that keeps supply chains moving in a productive, effective manner.

How does cross docking work?

Instead of a standard distribution center (DC), cross-docking facilities are more of a “sorting center”; a place where goods quickly pass through. These facilities require far less storage space than a DC. The docking terminal consists of inbound and outbound lanes. So, inbound shipments go to a receiving dock and then the products go directly to outbound destinations on forklifts or conveyor belts or sorted and consolidated before making their way to outbound shipping. Usually, the goods spend less than 24 hours within a docking terminal.

Types of cross docking

1. Continuous Cross-Docking

The simplest and fastest process. It provides a central site for products, so they are immediately transferred from an inbound truck to an outbound truck. If trucks arrive at the terminal at different times, they will incur a waiting time.

2. Consolidation Arrangements

The process of merging several smaller product loads into one truck or one big load in the dock facility. This way, incoming freight is combined with goods stored at the terminal to form full truckload shipments.

3. Deconsolidation Arrangements

This process is the opposite of consolidation arrangements. Large product loads are broken into smaller loads for easy transportation. Usually, these small loads go directly to a customer.

When cross-docking is used?

Moving from traditional DCs to facilities would enable a company to increase inventory turns and reduce material handling and distribution costs. Effective cross-docking leads a business to cost savings by eliminating the need for warehouse space and labor costs (less packaging and storing).

This method seems to be a universal upgrade for the supply chain. However, there are some industries that especially benefit from this method, they include:

• Perishable goods, foods, and beverages
• Inbound supplier components and raw materials
• Already packed and sorted products, parcels

It is cost-effective for a company with high-volume shipments and substantial transportation needs – otherwise, shipping won’t be smooth or fast. Also, the method requires a heavy investment in automation, visibility, outbound, and inbound logistics.

How can you benefit from cross docking?

Trucking companies love this shipping practice because trucks have fuller loads and exact destinations for each shipment which saves transportation costs. This way, a shipper can adapt quickly to new selling channels and market conditions; this shipping method reduces the overall time to reach each customer.

Although this practice delivers significant financial and operational advantages, to achieve effective performance, companies must implement proper tracking and compliance. Just like other data-driven supply chain practices, cross-docking requires control and visibility of shipment from supplier to end customer. For more information about how PLS can help your company with customized logistics solutions and supply chain design, click here.

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