Fast delivery and practical cooperation with the consumers are essential parts of modern supply chain management. Today, the retailers who aim to become the leading representatives of their niche are free to choose from various supply chain strategies. Cross-docking is a strategy that provides numerous benefits when applied correctly.
What Is Cross-Docking?
It is a logistics procedure that “removes” the notion of storage from the supply chain management system. The strategy is usually applicable in the distribution docking terminal. As a rule, the storage section occupies minimal space. Instead, dock doors and truck lots on both sides of the docking area make the inventory replenishment process even more convenient.
When applied correctly, the strategy invests in integrating a company’s supply chain system with its warehouse management software.
What Are the Main Types of Cross-Docking?
There are two main types, including:
Pre-distribution is applied when the customer is known long before the products leave the suppliers’ docks. The pre-distribution cross-docking system works according to prearranged instructions.
Post-distribution is the other type of such systems applied when the customer is identified after the products reach the distribution facility. Here happens the sorting, repacking, and delivery of goods. The post-distribution tactic implies that the products may sometimes spend more time at the facility. This is when the spare storage space is used.
The advantage of post-distribution cross-docking is the retailers’ extra time to take steps concerning the sales forecasts, warehouse management, and shipping strategies.
There are three basic cross-docking methods:
- Consolidation Arrangement
- Deconsolidation Arrangement
The fastest method is the first one. With this method, the goods are in constant movement, meaning that when they reach the cross-docking facility, they are immediately sent to the customers. When putting this method into practice, it is crucial to have set a precise working schedule. If the delivery trucks arrive late, an overload and delivery delays might occur.
The consolidation arrangement helps to reduce the shipping costs considerably. So, how exactly does this method work? Consolidation arrangement means merging and packing similar small packages into a larger load because shipping each parcel from the cross-docking facility is not profitable.
The last method, known as deconsolidation arrangement, is the opposite of the previous method. Oversized loads are sorted into smaller parcels. As a result, it boosts transportation and delivery to the consumers.
A Cross-Dock Warehouse Explained
Is it surprising the term “cross-docking warehouse?” Although the modern cross-dock facilities should lower the risks of traditional warehouses, there is still some space for rearranging and storing the goods.
A standard cross-dock warehouse has dock doors on two sides of the terminal. Each side of the cross-dock warehouse serves either inbound or outbound trucks. The operation scheme is quite simple. Firstly, the already loaded inbound trucks arrive from the supplier straight to the cross-dock warehouse. Here the parcels are unloaded and sorted according to their final destinations. After sorting, the parcels move to their outbound trucks via internal transportation, such as pallet trucks or conveyor belts. Finally, when the parcel reaches its outbound truck, customers receive the products.
Cross-Docking VS Warehousing
We’ve already underlined the qualities of a cross-dock warehouse. The main feature differentiating a traditional warehouse from a cross-dock facility is that it stores the products until the purchase and delivery to their owners. This requires time, money, and effort. Warehousing might be suitable for products with a longer shelf-life. These could be clothes, office utensils, kitchenware, electronics, repair and construction materials, etc.
A cross-docking warehouse, on the contrary, is an ideal option for time-sensitive goods, such as groceries, drugs, dairy, makeup items, and other products that have a short expiry date.
The Pros and Cons
The advantages of having a cross-docking warehouse:
- Inventory management risks and storage costs are reduced;
- The cross-docking strategy dramatically reduces the last-mile delivery costs. As a result, faster shipping and quick delivery result in higher customer satisfaction;
- More simplified process of material management. This means that the retailers maintain a higher inventory turnover with the help of the cross-docking strategy.
- Having your cross-docking facility work smoothly and effectively is a complex and time-consuming procedure. Moreover, all the operation stages require constant control and supervision by the specialists.
- Some supplying companies won’t be able to deliver the customer-ready products on time, so you should prepare a strategy to handle the delays;
- Building a cross-dock terminal requires a lot of free time and investment.
The Efficiency of Cross-Docking for eCommerce
There are no strict rules for businesses wanting to adopt this strategy. Any company can build a cross-dock warehouse if the strategy fits its supply chain management.
Such a system can be beneficial for companies cooperating with several suppliers. With the help of such facilities, the present-day consumers’ needs for fast and effective eCommerce shopping, including the decrease of the last-mile delivery rates.
Due to the rapid development of innovative inventory automation technologies, cross-docking is becoming a promising strategy for eCommerce businesses.
The Bottom Line
The cross-docking technique is an excellent opportunity for businesses to maximize their fulfillment operations by taking the most out of modern-day technologies. Nevertheless, it is still crucial to remember that it is impossible to have a well-operation cross-dock network without specialized analytics and real-time data.
Using the privileges of the IT industry, all four sides of the cross-dock operation network, including the eCommerce retailer, suppliers, drivers, and consumers, will stay connected. This will help to reach the initial goal of every retailer, i.e., establish themselves as a reliable representative of their sphere.