Cross-Docking in logistics: what does it consist of?

  • Jul 26, 2021
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Nothing slows the productivity of a supply chain like a lack of organization. If your company is looking for an advantage to speed up your processes without compromising quality, cross-docking is an excellent strategy to use. While it must be implemented with care to ensure optimal performance, there are several benefits of cross-docking that are worth taking a closer look at.

Cross-docking makes your inbound and outbound delivery service much more efficient, which reduces transportation costs and improves customer satisfaction due to faster delivery times. The name comes from the process of quickly receiving and transferring products through a dock in the middle between the two trucks for a quick and hassle-free transfer.

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It's a unique procedure involving minimal storage time; instead, the products of a supplier or manufacturer are distributed directly to the customer or the retail chain. Cross-docking relies on proper space and time management planning for efficient delivery from inbound to outbound truck.

Cross-docking

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In this article you will find:

Cross-docking features

The name "cross-docking" which in Spanish would be like cross coupling, explains the process of receiving products through an inbound dock and then transferring them east to the outbound shipping dock.

Cross-docking is a technique that used in the trucking and retail industries to quickly consolidate shipments from disparate sources and achieve economies of scale in outbound transportation. The idea is to transfer inbound shipments directly to outbound trailers without storing them between them.

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Consolidate deliveries from different supply locations into common shipments to a customer or another supply location. Consolidation can take place in one or more warehouses along the route to the destination. Inventory can be shipped to intermediate supply locations without the need for storage or packaging.

It is an improved synchronization of demand in which the distribution center essentially acts as a high-performance sorting facility and favors the timely distribution of the commodity.

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Advantage

Once incoming products arrive at the distribution terminal, they are quickly unloaded at the central dock.

From there, the products can be classified and analyzed to guarantee services of fast and reliable delivery. Once all the relevant products have been selected, they are moved to the opposite truck. Whether a forklift, conveyor, pallet truck, or other equipment is used, depends entirely on the configuration of the terminal. Once the products are uploaded, they are ready to be shipped to the customer or retailer.

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Among the main advantages that this entails, are the following:

  • Lower inventory storage, handling costs, and operating costs by streamlining the flow between origin and destination.
  • Inbound (source) flows are transferred directly to outbound (destination) flows.
  • Short transport times
  • Full truck loads are achieved by reducing transportation costs
  • Warehouses at central distribution terminals are less expensive than an average warehouse.
  • It is easier to handle the merchandise that arrives.
  • Easier to keep perishable products fresh.
  • Higher compliance rate for fixed deadlines.
  • Easier to update and greater availability of merchandise.
  • Better organized supply line managing customer needs with stores.
  • Less need for space.

Disadvantages

Some of the details that must be taken into account that can turn into disadvantages are the following:

  • If manufacturers / suppliers are not agile enough to react to changes in demand, customer service suffers.
  • Tracking inventory and the cost of inventory in transit can be a problem.

Types of companies suitable for cross-docking

Since this technique it has many advantages for your business, how can you know which type of companies are the most suitable for cross-docking. Some industries realize these benefits faster than others, as they can be costly to implement.

These companies / industries include:

  • Automotive industry- Automakers traditionally rely on just-in-time deliveries and have been using cross-docking for decades. In fact, the lean manufacturing model, also known as just-in-time manufacturing, was pioneered by Toyota and was originally known as the "Toyota Production System."
  • Food and beverage industry- Restaurants need a constant supply of ingredients for their menu items. Additionally, the increased chances of inventory spoilage make cross-docking a smart alternative. Instead of spending money on expensive temperature-controlled inventory management, companies can quickly move food through the supply chain.
  • Consumer goods: Why is Amazon so successful? Because it has almost everything people need, at the price they love, and the products arrive quickly. It is difficult for competitors to keep up. While Amazon can afford to be financially impacted on shipping fees, many companies cannot, which prevents them from offering the same speed at the price at which consumers have been used to. Cross-docking helps companies meet consumer demands faster and at lower cost.
  • Chemical products: Chemicals are the definition of 'high maintenance inventory'. Their specific storage requirements make them expensive and potentially dangerous. Minimizing inventory management by getting them to the end customer sooner rather than later is the ideal scenario and cross-docking allows it.

If your business would significantly benefit from minimal storage, then cross-docking may be for you. However, always keep in mind that wanting your products to move quickly may not be enough to justify the switch to cross-docking.

Cross-docking it is more effective for companies that move a large volume of goods by allowing them to consolidate shipments from various sources and send them to their end users via the best route.

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