What Is CrossDocking?

When it comes to supply chains, speed and productivity are king. To achieve a competitive advantage in a crowded marketspace, many companies turn to cross-docking. When appropriately implemented, cross-docking can improve efficiency and handling times, saving companies time and money in the process.  

So what is cross-docking?  

Cross-docking is a logistics procedure which helps keeps supply chains moving in a productive and effective manner. During the process, products are directly distributed from a supplier or manufacturing plant to an outbound carrier, such as a customer or retail chain. Instead of a standard distribution center, cross-docking facilities are more of an “organizing center,” through which goods quickly pass since there is minimal space for storage.  

Cross-docking warehouses have far less storage space than your average distribution center, so once the products are received, they go directly to outbound destinations on forklifts, conveyor belts, pallet trucks, etc. Here they are sorted and consolidated before making their way to outbound shipping. Usually the goods spend less than 24 hours within a docking terminal. 

When do companies use cross-docking? 

Moving from traditional distribution centers to cross-docking facilities enables companies to increase inventory turns and reduce material handling and distribution costs. Effectively managed cross-docking can also reduce costs by eliminating the need for warehouse space and labor, which are two driving costs in supply chains around the world. It reduces costs because of less packaging and storage space needed. Generally speaking, this method seems to be a universal upgrade for the supply chain.  

Seems great, what’s the catch? 

As with most processes, there are risks that can accompany these benefits, so it’s safe to say the process of cross-docking will not suit all warehousing needs. Therefore, it is essential to understand these pros and cons.  

The benefits 

Many benefits come along with cross-docking, which we’ve briefly discussed.  

  • – The amount of storage space saved. Although there must be an area reserved in the facility allocated to the products, cross-docking still frees up core storage space. Which, as a result, benefits inventory cost savings too. 
  • – It shortens delivery times and makes a more flexible and agile supply chain by saving time dispatching goods. As a result, this increases customer satisfaction. 
  • – 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 savings it represents. 

The risks 

Of course, anything with benefits usually always poses risks as well. 

  • – 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. Think about this as a short-term loss for the long-term gain. 
  • – It requires effective integration of the entire supply chain and information systems like fleet and warehouse management software. 
  • – It requires much time for planning and coordination. 

Cross-docking with a 3PL 

Many trucking companies prefer cross-docking practices 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 to reach each customer.  

Although this practice delivers significant financial and operational advantages, companies must implement proper tracking and compliance to achieve adequate performance. By partnering with C.L. Services, we offer data-driven supply chain practices to help ensure control and visibility of shipments from supplier to end customer.   

Submit the contact form below to see how C.L. Services can help your company with customized logistics solutions and supply chain design. 

 

Written by:
Tim Griffin
Director of Marketing & Media, C.L. Services

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