Speed and productivity are two essential factors for growth in supply chains. Making cross-docking just one strategy implemented for you to achieve this competitive advantage. When appropriately implemented, cross docking services can improve efficiency and handling times. But what is cross docking, and how does it impact supply chain efficiency?
What are cross-docking services?
Cross-docking, also known as crossdocking, is a logistics procedure in which products from a supplier or manufacturing plant are distributed directly to an outbound carrier, such as a customer or retail chain. Essentially, it removes the storage link in the supply chain, reducing storage costs and improving inventory management. Cross-docking occurs in a distribution docking terminal, consisting of dock doors on two sides (inbound and outbound). It’s a practice that keeps supply chains moving effectively. Instead of a standard distribution center, cross dock facilities are more of a “sorting center,” where goods quickly pass through since there is minimal space for storage.
Cross docking warehousing facilities have far less storage space than a traditional distribution center. First, inbound shipments go to a receiving dock. Then, the products go directly to outbound destinations on forklifts, conveyor belts, pallet trucks, or other means. They are then sorted and consolidated before making their way to outbound shipping. Usually, the goods spend less than 24 hours within a docking terminal, making cross docking in supply chain management an efficient process for high-volume products.
When are cross-docking services used?
Moving from traditional warehousing to cross dock warehouses would enable a company to increase inventory turns and reduce material handling and distribution costs. Effective cross-docking can also reduce costs by eliminating the need for warehouse space and labor. It reduces costs because of less packaging and storage area needed. This method seems to be a universal upgrade for the supply chain. However, some industries significantly benefit from this method. These industries include:
- Perishable goods, foods, and beverages
- Inbound supplier components and raw materials
- Already packed and sorted products, parcels
Industries that use cross-docking
Cross-docking provides many benefits to supply chains across the country. However, some industries get the competitive advantage of cross docking more than others. For example:
- Automotive
- Chemicals
- Consumer Goods
- Food and Beverage
These industries often utilize cross dock solutions to improve their logistics processes and reduce shipping times.
What are the benefits and risks of cross-docking services?
The process of cross-docking will not suit all warehousing needs. Therefore, it’s essential to understand the benefits and the risks that come with it.
The benefits
Many benefits come along with cross docking; some are:
- The amount of storage space saved. Although an area must be reserved in the cross dock facility allocated to the products, cross-docking frees up core storage space. The protected space, as a result, benefits inventory cost savings too.
- It shortens delivery times and makes a more flexible supply chain by saving time dispatching goods. As a result, this increases customer satisfaction and improves order fulfillment.
- The number of operations/ handling of loads is significantly reduced: unloading, quality control, order conditioning, and dispatch of goods are maintained. However, the middle operation tasks have been removed, which means less risk of damaging the goods.
As a result, efficient cross-docking improves the overall profitability of the facilities that use this method due to the time it saves and the enhanced inventory control it provides.
The risks
Nothing is perfect, so anything with benefits usually always comes with risks.
- Implementing cross docking to your warehouse facility may result in completely redesigning your warehouse to reserve space for a conditioning area to assist with cross-docking tasks. As a result, this strategy can be costly in terms of facility design and labor costs.
- It requires effective integration of the entire supply chain and information systems like fleet and warehouse management software, including real-time information systems.
- It requires much time for planning and coordination, especially when dealing with seasonal merchandise or implementing just-in-time manufacturing principles.
Cross-docking methods
Cross-docking has three primary methods: continuous cross-docking, consolidation arrangement, and deconsolidation arrangement. Understanding these methods is crucial for optimizing cross docking logistics.
Continuous cross-docking
Continuous cross-docking is considered the most straightforward and fastest method. In continuous cross-docking, products and materials continuously move to a central site. These products are transferred immediately from an inbound truck to an outbound truck. This method has minimal wait times. However, trucks arriving at the terminal at different times will incur a waiting time. This method is often used in pre-distribution cross-docking scenarios.
Consolidation arrangements
In the consolidation arrangement method, several smaller products or freight loads combine into one significant load in the crossdock warehouse. This way, incoming freight is combined with goods stored at the terminal to form full truckload shipments. This method is beneficial because it’s not always profitable to ship out individual parcels from the cross-docking facility.
All consolidation loads arranged must be temporarily stored at a warehouse until the truckload is full. Then, a load must be full to be shipped out. Despite the delay in shipping, this method has reduced shipping costs for companies. This approach is also known as consolidation cross-docking.
Deconsolidation arrangements
Deconsolidation arrangements, also referred to as deconsolidation cross-docking, are the opposite of consolidation arrangement, which breaks down large product loads into several smaller loads for easy transportation. These small loads usually go directly to a customer. This arrangement is the one that’s traditionally used in direct-to-consumer fulfillment and is a form of post-distribution cross-docking.
Cross-docking services and working with a 3PL
Freight carriers like cross-docking because trucks have fuller loads and exact destinations for each shipment, saving transportation costs. This way, a shipper can adapt quickly to new selling channels and market conditions; this shipping method reduces the overall time it takes to reach each customer.
Although this practice delivers significant financial and operational advantages, companies must implement proper tracking and compliance to achieve adequate performance. Effective cross dock solutions often involve automated systems and warehouse automation technology to optimize the process. Factors such as dock door placement and cross dock building design play crucial roles in maximizing efficiency.
By partnering with PLS Logistics Services, we offer data-driven supply chain practices to help ensure control and visibility of shipments from supplier to end customer.
Get more information on our website about how PLS can help your company with customized logistics solutions and supply chain design, including advanced cross docking services to enhance your supply chain efficiency.
