What is Cross-docking?
Cross-docking is a supply chain tactic that can perform significant reductions in total costs. In this plan, cross-dock facilities act as transfer points where inbound product flow is synchronized with outbound product flow to virtually eliminate storage of inventory. Cross-docking is an extremely important strategy, as it leads to considerable savings at many times by turning warehouses into transfer nodes, rather than storage nodes. Cross-docking in several forms has been in use for a long time, especially by package delivery companies. Cross-docking requires total commitment and continuous monitoring at all times by all the individuals involved in the cross-docking initiative. For cross-docking to operate easily information flow has to take place sleekly. This always requires additional attention to the information systems technology, and in people that will help keep the information systems technology and complex operations working. Cross-docking has found extensive applications in the retail industry. Cross-docking is also popular in the telecommunications and electronics industries. These industries change at a fast pace, with products typically having very short life cycles.
The benefits of cross-docking are:
• Allows the efficient consolidation of products.
• Reduces inventory levels due to the elimination of storage.
• Enables faster product flow. Enables more frequent deliveries.
• Decreases inventory obsolescence due to diminished inventory and faster product movement.
• Minimizes labour provisions and costs due to decreased material handling (through the elimination of putaway to storage and order picking).
• Decreases inventory loss costs due to less material handling.
• Decreases the volume of space required, and thus raises the handling capacity of the facility.
• Supports customers’ Just-in-Time strategy.
• Stimulates payments to suppliers (which is an important argument that can be used to convince suppliers to engage in cross-docking).
• Improves the connections with the supply chain partners
Cross-docking may be used manually, with almost no automation or may be used with automation, with equipment such as conveyors and sortation systems available. The need for automation increases when the variety of product increases, when the cross-dock facility has to carry out the sorting of cases, and when more of the demand is for cases rather than pallet unit loads.