What is crossdocking?

Cross Docking is a logistics technique that eliminates the function of storing and collecting orders of a warehouse, while still enabling the receiving and shipping functions.

Warehouse operations without inventory

Of the four main functions of warehouse operations (Receiving, storing, collecting orders, sending goods) the two most expensive functions are storage (due to storage costs of inventory) and collection. goods (due to labor costs).

Cross Docking is a logistics technique that eliminates the function of storing and collecting orders of a warehouse, while still enabling the receiving and shipping functions. The main idea of this technique is to transfer shipments directly from trailers to trailers – bypassing the intermediate storage process. Conventional shipments take only a day at the Cross dock and sometimes less than 1 hour.

Cross docks are hubs that primarily handle sorted and grouped freight cars with other products and load them into outbound trucks. These vehicles will leave the Cross dock to a production area, a retail store or another cross dock.

What makes Cross Docking different from traditional warehouses?

In the traditional model, warehouses maintain stock until there is a customer order, after which the products are picked, packed and shipped. When additional orders arrive at the warehouse, they are archived until the customer is identified. In the Cross Docking model, customers are informed about products coming into stock and there is no need for storage.

So does that mean that in the Cross Docking model, customers (a retail store, for example) have to wait for more time to ship their goods to the warehouse? Yes, but this shipping must follow a strict and rigorous delivery schedule to compensate for any uncertainty associated with extending lead time (in this case lead time is from customer orders / or from the time the business deploys the order until delivery to the customer). On the contrary, if done correctly, Cross Docking will allow companies to eliminate inventory costs and reduce transportation costs at the same time.

Benefits of Cross Docking:
  • Firstly: in some cases, the costs determined by retailers are tied to stocking of high and stable demand items. In this case, Cross Docking is seen as a way to reduce inventory cost.
  • Second: For some other retailers or small and retail carriers, Cross Docking is seen as a way to reduce transportation costs. For example, retail stores may receive shipments directly from vendors that use non-full truck (LTL) transport services or individual shipments. However, this has caused an increase in the cost of transporting goods (due to the high number of vehicles, and the increase in expenses such as fuel, repair and upgrading costs, and expenses). labor costs …). Cross Docking is a way to consolidate these shipments to achieve a certain number of vehicles to reduce input costs and simplify pick-up at retail stores.
Types of Cross Docking

The term “Cross Docking” has been used to describe different types of activities, all of which involve the quick collection and shipping of products. Napolitano (2000) proposed the following classification of Cross Docking:

  • Manufacturing Cross Docking (Manufacturing Cross Docking): Supporting and collecting input sources to support Just-in-time in production. For example, a manufacturer may rent a warehouse near their factory, and use it to prepare for assembling or gathering the necessary components of each part together. Because the needs of each component are known in advance, based on the output of an MRP (production resource planning system), there is no need to maintain a certain amount of inventory.
  • Cross Docking Distributor (Distributor Cross Docking) Collecting input products from different suppliers into a pallet of mixed products. This pallet will be delivered to the customer as soon as the final component is received. For example, computer parts of distributors can source components from different suppliers and combine them into a single shipment for customers.
  • Cross Docking (Transportation Cross Docking): This activity combines shipments from a number of different carriers in LTL form or in small packages for economic advantages of scale (Economies of scale).
  • Retail Cross Docking (Retail Cross Docking): This process involves taking products from multiple suppliers and sorting them into output trucks for a number of retail stores.
  • Opportunistic Cross Docking (Opportunistic Cross Docking): Can be used in any warehouse, moving a product directly from the receiving area to the shipping area in order to meet a known need such as a single order Customers’ order.

Resources

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What is Cross Docking? Things To Know About Cross Docking