All you need to know about Cross Docking
One of the major aspects to consider in logistics is the hassle of finding storage. Often goods require warehousing between distribution centers yet handling & storage operating costs can be very expensive. A cost-saving solution to combat these increasing costs is cross-docking.
Cross-docking is the practice of unloading goods from an incoming freight carrier & loading these materials directly onto outbound trucks, trailers, or rail cars. Goods are sorted or combined with minimal to no warehousing. This efficient process allows you to streamline the supply chain from point of origin to point of sale, reduce handling & warehousing costs, and get your products to the customer faster.
In a typical cross-docking scenario, inventory is stored for a little or no time at all before leaving for its next destination. The process of cross-docking is quite simple & can provide customers with significant cost savings.
For example, two trucks arrive at a logistics center, one carrying clothing & another cell phone, both of these items are needed immediately, rather than shipping large quantities in advance to be stored until needed, the suppliers of these products ship only the quantity ordered to a single facility shortly before the required date. When these trucks arrive, the inventory is unloaded onto the receiving dock location to be sorted and staged for shipment. After the order is staged, a truck may be loaded to order specification & shipped to a retailer.
Cross-docking is a great tool in your logistics tool belt. This service can be a key differentiator between you and your competition.
Top 10 benefits of Cross-docking
Cross-docking reduces the square footage needed in your facility because little to no storage occurs. Only a small amount of space is needed for this activity. Significantly reducing the footprint of your facility, the footprint of your facility & the associated costs.
2. Reduces Inventory carrying costs
Because little to no storage occurs in cross-docking facilities, the costs related to storing inventory are also reduced.
3. Reduces material handling needs
In conjunction with this reduction in storage costs, material handling also sees significant reductions. Material handling is limited to storing, staging and unloading with minimal picking & put away activity.
4. Increase product quality
During the unloading & staging process, warehouse staff can easily inspect inventory for damage incurred during transit. This can help to reduce the amount of damaged inventory that reaches customers and help improve customer satisfaction rates.
5. Reduces labor costs
Reduction of material handling needs leads directly to the labor cost savings associated with those activities. This allows your business to pass on savings to customers providing additional competitive advantage related to cost.
6. Reduces costs associated with damaged inventory
Because the number of hands-on each inventory item is reduced due to lack of storage & minimal handling the probability of damage to inventory & the costs associated with this are also significantly reduced.
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7. Reduces delivery times
Utilizing cross-docking also assists in the reduction of delivery times. Typically facilities offering these services are located in geographical areas that are near the final delivery destination. This helps to reduce delivery times by eliminating excess travel costs.
8. Increases customer service leads
Cost savings, increased product quality & reduced delivery times due to cross docking also factored in to help increase customer service satisfaction. This will help to retain current customers & capture additional market share.
9. Reduces transportation costs
The utilization of cross-docking can help to reduce transportation costs, with optimized routing miles are wasted, reducing fuels & associated vehicle service costs
10. Reduces fixed asset costs
Lastly, cross-docking provides fixed asset cost savings. Cross-docking requires less facility square footage; these smaller facilities require less cash outlay to operate.
All of these benefits help demonstrate one key issue, implementing cross-docking can provide your business with many new opportunities to save money, increase efficiency & better serve customers.
When to use cross-docking?
There are three main scenarios when cross-docking is used most frequently.
The most frequently encountered use of cross-docking is when a given inventory item is stable & shows strong consistency. These items can be placed on a recurring fulfillment schedule using cross-docking. This eliminates the need for surplus inventory to be stored in case of out-of-stock situations.
2. Time-sensitive/ Perishable Inventory
Cross-docking is also often used when handling time-sensitive & perishable inventory. Due to the reduced shelf-life, inventory needs to reach retailers with a reasonable remaining shelf life. By forgoing storage & utilizing cross-docking, delivery time is reduced, this provides the goods with a longer sales window.
3. Various product selection
In the case of discount retailers, product selection varies by day because customers cannot expect a specific inventory item to be in stock. Cross-docking can be utilized to quickly deliver bulk shipments of varying inventory on a recurring schedule, in this case stock scenarios are not a concern & storing surplus inventory is not necessary.
Cross-docking, while a fairly simple process, helps to increase operational efficiency in highly complex supply chains. Each business’s supply chain varies in complexity due to a multitude of factors. These factors determine how & when cross-docking should be used.
Edgistify offers cross-docking at its dark store and warehouse network across the nation. Our robust dark store & warehouse network with years of expertise ensures that your goods are well packed and safe for distribution. Switch to Edgistify for all your supply chain solutions.