If you’re currently searching for ways to improve your supply chain’s efficiency to ensure customers receive their products on time, you can keep costs low, reduce labor, and ensure you don’t use too much storage space. When you use this system, you’ll benefit from quicker inventory replenishment and fulfillment.
Over the past few decades, a technique known as cross-docking has been used to improve delivery times and make the supply chain more efficient. The advancements that have been made to inventory automation in recent years have allowed cross-docking to be a more appealing solution for any businesses that have eCommerce operations. The following guide explores cross-docking and how it can help you improve your supply chain.
What is Cross-Docking?
Cross-docking is a process that can effectively reduce or eliminate warehouse storage costs, inventory handling, and space requirements. It works by unloading goods from inbound vehicles and directly loading them onto outbound vehicles. In this scenario, the storage process is skipped altogether, which should substantially lower your costs. If you use this technique when shipping any type of item, you’ll be able to streamline your supply chain and more efficiently move your goods to the market.
Once your business begins to carry out cross-docking, it should be easier for you to move products that are being shipped to the same destination in fewer transport vehicles. It’s also possible for larger shipments to be separated into small groups for simple delivery. You have multiple ways to ship your goods, all of which are more effective than the traditional techniques.
The cross-docking process often occurs in a special docking terminal around your warehouse. This terminal is the location where your inbound goods are initially obtained and sorted before being delivered to their final destination. Once these items have been sorted, they are moved over to the other side of your dock with a forklift or conveyor belt.
Before implementing cross-docking in your warehouse, keep in mind that it’s not always suitable, which is why you must be confident that using this process in your facility will make your customers more satisfied, reduce costs, and increase productivity. Cross-docking is highly advantageous for temperature-controlled items, which include foods that must be transported from one destination to another as rapidly as possible. If items have already been packed and sorted, the cross-docking process is highly recommended. The primary reasons that cross-docking is used include:
- Using only one method of transportation to keep transportation costs low
- Providing a space where products can be sorted and combined before being delivered to multiple destinations
Types of Cross-Docking
There are two primary types of cross-docking, which include pre-distribution cross-docking and post-distribution cross-docking. If you’re switching from the standard distribution model to cross-docking, you should know how the two types of cross-docking differ from one another.
When you perform pre-distribution cross-docking, goods will be unloaded before being sorted and repackaged. This process occurs with the use of predetermined distribution instructions. In the event that the staff in your warehouse knows about the end-customer and where this customer is located before goods are even shipped out by the supplier, it’s possible to perform pre-distribution cross-docking immediately after it reaches the main dock at your warehouse.
When using the pre-distribution technique, your inventory costs will be very low since items don’t remain in the warehouse for long. Consider using this technique in your warehouse if you are a retailer or have insights into the customer and supplier dynamics.
Post-distribution cross-docking involves performing the sorting process after choosing the facility as well as the customers based on current demand. With this approach, you’ll be able to make more effective shipping decisions that are based on data you’ve already received.
When you implement post-distribution cross-docking, your goods will be stored directly in the main cross-docking facility until you can effectively complete the final portion of the journey. The only downside to this option is that storage costs are somewhat higher. However, you’ll still benefit from significant cost savings in comparison to the standard shipping model that involves shipping your goods between several facilities before customers gain access to them.
While the storage costs are somewhat higher, retailers and distributors alike are given more time to determine which location the inventory needs to be shipped to. In many cases, these decisions are based on existing inventory counts and forecasting numbers. If your inventory is high and you’ve discovered inefficiencies in how your warehouse operates, it might be wise to switch to cross-docking.
Benefits of Cross-Docking
There are many advantages associated with implementing cross-docking in your facility, the primary of which include:
- Reduces inventory costs – Minimizes the need for ample warehouse space
- Improves delivery times – Allows for extensive supply chain optimization for quicker product transportation
- Increases accuracy – Eliminates your need for manual handling while also reducing errors
- Facilitates better responsiveness – Performing real-time tracking allows for a more rapid response to any notable changes in demand that take place
- Increases sustainability – Your transportation costs, emissions, and number of shipments are substantially reduced
Since products don’t spend as much time in your warehouse, you’ll be able to deliver them to your customers at a faster rate, which should give you an edge against the competition. Since receiving inventory only requires your staff to make sure that the inventory is received and shipped, you won’t need to scan this inventory into your warehouse management system (WMS).
Once your supply chain has been optimized with a cross-docking warehouse, you can use this facility as a sorting destination. The products you’re distributing will then be assigned to carriers based on where the shipments are going. By having a core hub for inventory handling, B2B fulfillment should also be easier since you won’t need to pick and fulfill individual items.
Efficiency and Consolidation
Cross-docking allows for the consolidation of products that are heading to the same destination. As mentioned previously, you can use less vehicles for the outbound portion of the shipment. If you break large shipments into smaller groups of items, the delivery process should be simpler and more straightforward. Shipment consolidation allows you to build a more efficient supply chain.
Minimizing Handling and Damage
Cross-docking is capable of reducing the number of handling points that occur throughout the delivery process, which minimizes the risk of product damage. If you’ve received a customer complaint in the past pertaining to a damaged product, this issue most often occurs because of how the product is handled during the shipping process.
When you use the traditional less-than-load (LTL) shipping process, you’ll need to send these items through multiple facilities, which further increases the likelihood of damage. Many businesses use traditional shipping methods because it’s not cost-effective to send out trucks that are filled with products. In this scenario, your product will be sent through several shipping facilities before it gets to the intended destination.
If you want to mitigate this issue, it’s highly recommended that you opt for cross-docking, which decreases overhandling as well as possible damage during transit. It’s much more likely that you’ll be able to keep your customers satisfied once you’ve implemented cross-docking.
Considerations and Challenges
While there are many advantages of using cross-docking in your operations, there are also numerous challenges that you must contend with. For instance, creating and setting up a standard cross-docking terminal can only be done with a considerable amount of design and planning. You’ll also need to consistently monitor the system once it’s implemented to make sure that it’s working properly.
Logistics providers need to maintain the right number of trucks to ensure efficient delivery. Pressure is placed on suppliers as well as the logistics provider to make sure that customer-ready goods are being regularly delivered. For cross-docking to be performed correctly, you must have the right infrastructure and place a focus on coordination to effectively manage your inventory.
There are many different types of technologies that already support cross-docking, which means that you should be able to integrate cross-docking into your facility without encountering many problems. The majority of supply chain management and ERP solutions currently support cross-docking. Transportation management systems and warehouse management systems also accommodate cross-docking and allow for efficient execution of these operations.
Cross-docking is a highly advantageous process that allows you to benefit from cost reduction, faster product delivery, and an efficiency improvement. While there are several things you must do to integrate cross-docking into your operations, it’s not too challenging to use either pre-distribution cross-docking or post-distribution cross-docking. By implementing cross-docking operations, you can effectively streamline your supply chains and reduce the possibility that your products will be damaged at any stage of the shipping process.