No matter how well you plan and manage your inventory, you are likely spending a lot of money on storage. Cross docking is a potential solution that lets you distribute inventory more effectively without keeping it in your warehouse or distribution center for a long period. Take advantage of cross-docking services to reduce your storage costs and improve customer satisfaction.
What is Cross Docking?
The cross-docking definition is a method of scheduling in which materials are delivered directly from a manufacturer to a customer or from one form of transportation to another. This unique shipping process eliminates the need to store goods or materials in a warehouse, because you ship them to a customer as soon as you are done manufacturing, or you transfer them from one transportation vessel to another. For example, if you are the end customer and your vendor is located in Europe, they might put the product on a ship that would dock and move the product to a truck that would deliver it right to you.
How Cross Docking Works
Using this logistical strategy, goods are unloaded to a cross-docking facility in which they are sorted and transferred to the outbound transportation dock. Each facility usually contains trucks and dock doors. The facility has one location for inbound trucks and inbound shipments and a separate one for outbound shipments.
Trucks drop off inbound shipments and the dock team sorts them depending one where they are going. When each shipment is sorted and routed, they go to the outbound dock and a truck transports the items to their final destination.
Once you’ve implemented a cross-docking strategy in your business, you don’t have to use it for every shipment. You can choose which products to cross-dock and which to handle more traditionally depending on your goals and desired cost savings.
Types of Cross Docking
There are several types of cross-docking.
With pre-distribution cross-docking, receivers at the distribution facility already know where each package is going. Once the inventory arrives, they unload it and repackage it based on who will be receiving the final package.
As one cross-docking example, large retailers using pre-distribution cross-docking will determine which stores or distribution centers are getting inventory while planning the initial shipment. They may use demand forecasting or other data to determine which stores are most in need of the inventory and route the shipments to these locations.
Post-distribution cross-docking involves deferring the sorting process until after you choose the proper facility or customer. In this type of cross-docking, your inventory will sit at a cross-docking facility or distribution center longer, but you can use real-time data to decide where to ship them.
For example, large retailers using post-distribution cross-docking would look at inventory levels across their store network after the inventory has been delivered to the cross-docking facility and then determine which location to ship it to.
Consolidation cross-docking involves merging items from several inbound shipments to one outbound truck. Deconsolidation cross-docking involves unloading items from a single inbound shipment and loading them to different outbound shipments. Continuous cross-docking refers to moving all items from an inbound truck to an outbound truck.
Advantages of Cross Docking
Cross-docking benefits your company in multiple ways.
Reduced Lead Times
Cross-docking simplifies the traditional shipping process by eliminating a step. Instead of sending all shipments to a warehouse and sorting and storing inventory, you are sending merchandise directly to customers or to a distribution facility.
Using this strategy, you can better plan logistics, choosing shipping routes based on the location of outbound trucks. Instead of shipping all your inventory to a single sorting hub, you can distribute items upfront based on their final destination. Doing so speeds up your lead time, potentially increasing customer satisfaction.
Because there are fewer stopping points with cross-docking logistics, you risk fewer weather delays, equipment failures, and other potential supply chain disruptions.
Lower Inventory Costs
Cross-docking reduces inventory storage costs because you move inventory immediately. You might use space in your warehouse or distribution center to sort your inventory, but you don’t have to keep it there long-term.
Since you’re not storing products and other inventory in your warehouse, you don’t have to track it, which reduces warehouse management costs. You can also reduce your labor costs because you don’t need to sort and receive items in the warehouse itself.
Improved Customer Service
On-time cross-docking, or just-in-time logistics, allows you to service your customers more effectively. Along with reducing customer wait times, you are limiting package handling. Fewer people handling each package makes it less likely that someone will drop the package and damage the inventory.
Cross-docking is also great for dealing with perishable items. Since these items can be shipped directly to the store or the customer, there is a lower risk of spoilage. If you’re a retail supplier, you can get each order store-ready before you ship it, saving your customer time and improving your level of service.
Reduced Warehouse Space Requirements
With cross-docking, you don’t have to store as much in your warehouse, eliminating your need for a large space. Once you have perfected cross-docking, you will have an idea of how much space you actually need for low-turnover items and others that you choose to handle more traditionally.
You may find yourself looking for a smaller, less costly warehouse. Cross-docking operation is more affordable than a traditional warehouse, and it is more eco-friendly. Because you don’t have to store as much inventory, you can cut other warehouse costs including heating, power, and other utilities, lowering your carbon footprint in the process.
Enhance Your Cross Dock Operations With Proper Distribution Visibility
Cross-docking requires collaboration and communication to be effective. Distribution visibility can positively impact inventory storage, warehouse, or yard planning for activities such as deadline planning, first-in, first-out (FIFO) management, and cross-docking operations.
Surgere’s IoT distribution visibility solution can help you understand your transportation and distribution operations to optimize cross-docking. Our platform lets you track and manage shipments everywhere across the supply chain and coordinate transportation partners.
Use this visibility to optimize supply chain cross-docking with effective route planning, asset management, and real-time communication tools. Help minimize your transportation costs by cutting out an unnecessary step in the supply chain.
Contact us today to learn more about how we can help you.