What is cross docking in a warehouse?
Cross docking is a logistics procedure in which products from a supplier or manufacturing plant get distributed directly to a customer or retail chain with little to no handling or storage time. Cross docking is carried out at a distribution docking terminal which is usually made up of trucks and dock doors on the inbound and the outbound sides and very little storage space.
The term cross docking is essentially about the process of receiving products through an inbound dock and then transferring them across the dock to the outbound transportation dock. Cross docking reduces material handling and even reduces (or sometimes eliminates) the need to store products in warehouses.
Why is cross docking used?
Cross docking gets rid of the storage” link of the supply chain. The products get unloaded from inbound transportation, get sorted, and are then loaded on outbound transportation to continue their journey towards the customers. Products that are headed towards the same destination can be consolidated into fewer vehicles while larger shipments can be broken down into smaller groups to make the delivery process easier.
The main reason why cross docking is used is that it creates a leaner, more efficient supply chain. The products are spending less, or even no time in the warehouse, so your inventory handling and storage costs fall substantially. When cross-docking is used, the products also tend to reach the customer much faster, which gives retailers a competitive advantage.
Cross docking is also used because it gives you a central site for you to sort your products and combine similar products to be delivered to several destinations in the most productive, efficient, and fast manner. This process is known as ‘hub and spoke’.
It allows you to combine several smaller product loads into one means of transport or one vehicle, thus allowing you to save on transportation costs by using ‘consolidation arrangements’.
You also get to break down large product loads into smaller loads for the purpose of transportation, using ‘deconsolidation arrangements’ to create an easier delivery process.
What are the types of cross docking?
The types of cross docking include:
Manufacturing Cross Docking
Manufacturing cross docking is all about the receiving of purchased and inbound products required for manufacturing.
Distributor Cross Docking
Distributor cross docking involves combining different products in a single shipment to the customer.
Transportation Cross Docking
Transportation cross docking refers to the process of combining several smaller shipments into a single larger shipment for the purpose of gaining economies of scale.
Retail Cross Docking
Retail cross docking involves receiving products from several vendors and then combining them onto outbound transportation for a number of retail stores.
Opportunistic Cross Docking
This refers to the transferring of goods from directly inbound to outbound shipping docks so as to meet a known demand.
What is pre-distribution vs. post-distribution cross docking?
Cross docking can also be classified into two other ways: Pre-distribution cross docking and post-distribution cross docking.
In pre-distribution cross docking, the products get unloaded, sorted, and repacked in accordance with pre-defined distribution instructions. In this type of cross docking, the customer is identified before the goods even leave the supplier.
In post-distribution cross docking, sorting gets deferred till the point when the proper facility and customers are chosen, on the basis of demand. In this situation, the products might stay a little longer in the distribution or cross docking facility, but the retailers and the suppliers get a little more time to make better informed decisions about where they should ship their products, based on in-store inventory, sales forecasts, and point of sale trends.
What are the advantages of cross docking?
Cross docking has several advantages. Some of these advantages are:
- Cross docking helps you streamline your supply chain from the point of origin to the point of sale.
- It helps you reduce your warehousing costs. In some situations it could help you completely eliminate your warehousing costs.
- By reducing your storage times, it helps you reduce your inventory holding costs.
- When you engage in cross docking, your risk of inventory damage also gets reduced.
- Cross docking makes it possible for your products to reach the distributor and the customer at a much faster pace.
What is the difference between cross docking and drop shipping?
Cross docking is a more popular system than dropshipping. It focuses on making sure that the inventory spends the least time possible in a warehouse, sometimes there is no time spent in a warehouse. The products get shipped to the warehouse and are offloaded to one side of the dock. After that, the merchandise gets sorted according to the destination and gets directly loaded onto another truck at the other end of the warehouse. The only time that the products spend in the warehouse is during the sorting process.
Dropshipping on the other hand, reduces the role to the distributor to an entity that just provides shipping information. The manufacturer or the supplier takes on the job of directly shipping the products to the customer.
How is cross docking done in a warehouse?
In cross docking, the products come in through transportation such as trucks or trailers and are set on a receiving dock on one side of the ‘cross dock’ terminal. After the inbound transportation vehicle is docked, the products that it was carrying get moved either directly or indirectly to the outbound destinations.
The products are sorted and then moved to the other side of the ‘cross dock’ terminal by making use of a forklift, conveyor belt, pallet truck, or another method of transportation to their destined outbound dock. After the outbound transportation gets loaded, the products get started on their journey to reach the customers.