For companies developing (or transitioning to) a lean supply chain management approach, cross docking can be a key component in the timely flow of goods through the supply chain that is needed for Just In Time (JIT) manufacturing or inventory control. The same holds true for distribution channel networks.
The goal is to have the right goods at the right place at the right time and in the right amounts at all times, without carrying inventory as a safety net to buffer fluctuations in the flow of material either through the production process, or the flow of finished products through the distribution channel networks from manufacturer to wholesaler to retailer and ultimately to the customer. The desired result is lower cost, higher efficiency and a higher return on investment (ROI), as well as higher customer satisfaction by getting the desired finished goods to the consumer faster and at a lower cost.
Cross docking is a logistics strategy in which the role of a warehouse distribution center focuses on receiving and shipping and greatly reduces or eliminates functions such as put away, storage and order picking. Labor costs are greatly reduced by removing the put away process of receiving material into the warehouse inventory and by eliminating the picking process to fill orders from warehouse inventory. In addition, the need for warehouse storage space is also significantly reduced or eliminated. Inbound loads are received and shipped without being placed in the warehouse inventory. Often times, shipments spend less than 24 hours in a cross docking facility, and in some cases may spend as little as an hour being transferred from inbound trailers or cargo containers to outbound trailers or cargo containers.
Listed below are seven basic categories of cross docking frequently used in today’s 3PL environment:
- Manufacturing cross-docking – Raw materials or components needed in the manufacturing process are received and then directly shipped to multiple plants. Loads may be consolidated. The distribution center may also prepare sub-assemblies from received components.
- Distributor cross-docking – Shipments of finished goods from different vendors are consolidated and customer orders are filled and shipped with mixed product pallets
- Transportation cross-docking – This operation combines shipments from a number of different carriers or modes, as with small parcel or less-than-truckload (LTL) services, to gain economies of scale. Truck/rail consolidation can also fall within this category.
- Retail cross-docking – This process involves receipt of merchandise from multiple suppliers for large retail chains. Goods are sorted and orders are filled for each of the chain’s retail stores.
- Opportunistic cross-docking – In cases where a late-arriving or backordered product is needed rapidly, these goods may be cross docked to speed delivery, even if they are normally received into the warehouse inventory. This is a form of expedited handling.
- Hybrid cross-docking – In this scenario one or more products stored in warehouse inventory are blending with incoming material, assembled on mixed product pallets and then loaded on outbound trailers or cargo containers. A variation of this process can involve some inbound product being received into warehouse inventory while the rest is cross docked.
- Pallet-in/pallet-out – This is the simplest and most cost efficient variation of cross docking. Incoming loads of full pallets arrive already labeled for customer orders. Pallets are unloaded and reloaded into outbound trailers or containers for various different destinations.
Success in cross docking and to a larger extent in JIT inventory control is dependent upon close coordination with a third party logistics provider and with all other members of a comapnies supply chains and/or distribution channel networks. A high level of data integration (as with EDI) is needed for successful implementation, putting a premium on IT support for every member of the supply chain or distribution channel. Real-time visibility at every step is critical.
FW Warehousing is headquartered in St. Louis, Missouri with Midwest warehouse distribution centers in Missouri, Illinois and Indiana totaling more than four million square feet. Founded in 1949 with a focus on food-grade storage, FW later broadened its services to include general warehousing, dry storage, hazardous material and chemical storage, temperature-controlled storage and product distribution and fulfillment. FW Warehousing has more than 60 years of experience in third-party 3PL logistics and has been ranked in the top 100 Third Party Logistic companies in the country by Inbound Logistics magazine.
For more information about FW Warehousing. cross docking and the full range of logistics service capabilities, visit the FW Warehousing website.