Cross docking is not a new technique. However, current logistics trends mean that it is being used more and more. It is, for example, an indispensable ally for those seeking to reduce and even eliminate their stocks. And it is essential for companies that want to build Just in Time supply chains.
Definition of Cross Docking
Cross Docking is the process by which a certain merchandise enters a warehouse and, without being stored, is managed for shipment in the shortest possible time. Living up to its name -dock crossing-, the idea is to avoid all the processes and costs derived from storage in favor of maintaining a fluid movement of the goods.
The merchandise arrives from various points and suppliers to a distribution center or warehouse where the unloading tasks are carried out. Then, according to the orders that have to be fulfilled, the merchandise is taken to the docks from which it will be loaded for its subsequent distribution, where it is joined with the merchandise of the rest of the suppliers. In its purest form, cross docking can mean that merchandise doesn’t even touch the warehouse floor, going straight from the incoming truck to the outgoing truck.
It is true that having stored material reduces uncertainty and possible problems due to variations in demand or unforeseen events that may arise. However, Cross Docking is the answer to the current needs to reduce inventory levels while increasing production and the demand to work with more product lines with lower operating costs.
Types of Cross Docking
This type of Cross Docking is the simplest and also the most cost efficient. This is due to the fact that the pallets arrive already prepared and labeled for their final destination and it is not necessary to break them, manipulate them and re-palletize them. It is also known as Pre-Distributed and may not come on pallets but in boxes or other presentations. However, the key is that it is already labeled for its destination and that it arrives in the form in which it will be delivered to the customer (pallet, box, etc.).
A common example could be the large surfaces of electrical appliances. These receive the products of the different brands in their distribution centers and separate them for distribution to their different stores. It is in these output trucks where they will share space with the products of the other brands.
In this case, the merchandise arrives at the warehouse labeled by its reference. However, the merchandise must be handled, separated to conform to the necessary orders and labeled for departure (repalletizing if necessary).
Hybrid Cross Docking occurs when we not only use the products that have just arrived to prepare outbound shipments, but we also add products that we already had previously stored in the warehouse.
short term storage
Cross docking, by definition, excludes storage. However, this modality is usually included because it avoids the traditional process of storage in racks or shelves. It occurs when we leave the material aside, either inside a waiting trailer or in a place in the warehouse that is not intended for storage.
It usually occurs with bulky merchandise or merchandise that is expensive and complicated to store, but that cannot yet be taken to the departure docks for consolidation with the rest of the merchandise and its distribution. The longer the period in which the merchandise is stopped, the less Cross Docking the operation will have.
Among manufacturing companies, it is common for the merchandise or unfinished products that are received not to be sent directly, but rather to go to the assembly lines to continue receiving treatment. However, the fact of avoiding the storage of incoming merchandise and using it to directly cover customer orders places it within the Cross Docking philosophy.
Advances in information systems and in the different warehouse, inventory and distribution control software have facilitated the increase in these cases. Opportunistic Cross Docking works with very short periods of time and detects how inputs can be accommodated to fill orders. These are common cases, for example, the arrival of returned products or last-minute arrivals. Instead of storing them, they are directly attached to an outgoing order.
Cross Docking cannot be applied to any company without analyzing its characteristics and needs
When to Cross Dock
As often happens in logistics, not everything is advantageous. It is very important to know what our supply chain is like, if we can apply the Cross Docking technique to it and if we would benefit from doing so.
Perishable products, for example, are a good opportunity to use it and get the most out of its useful life, as well as the retail sector in general. It is also preferable to do it with products in which we have a stable demand, which makes it easier to create a continuous flow of inputs and outputs. Similarly, a product with very high demand may be more appropriate for direct shipments, while one with low demand may be more suitable for working with storage.
The ease of handling the merchandise is also a point in favor. Palletized merchandise or with standard measurements, products that are easy to handle -for cases in which it is necessary to depalletize, prepare orders and re-palletize-, etc. If the merchandise is complex to handle, we may be increasing costs instead of decreasing them.
We also have to take into account our own characteristics. Analyze if we have enough docks for entry and exit and with the necessary space to create these handling areas for Cross Docking. Assess whether we have the necessary computer and information technology systems: warehouse management software, labeling, radio frequency identification (RFID) systems, etc. In addition, we have to verify that the rest of the actors in the chain are also technically prepared and that we have good communication with them.
Do we work with a Just in Time methodology that will benefit from this change? Can all our products be adapted to Cross Docking or only some of them? These are questions you need to answer before launching.
Advantages of Cross Docking
Once we have managed to assemble an efficient Cross Docking system with the products from our catalog that lend themselves to it, we can enjoy several improvements:
Reduction of costs related to storage: less need for space and facilities to store, less working hours and elimination of storage tasks -both to introduce the merchandise and to remove it-.
Damage reduction by reducing the number of manipulations (store and pick up again) and the time spent in the warehouse.
Reduction of costs due to the obsolescence of the merchandise or its expiration while waiting in the warehouse.
Reduction in delivery times.
Increased consumer satisfaction. By being able to make faster and more secure deliveries, in addition to being able to transfer cost improvements to the price and be more competitive.
Croos Docking is also a basic technique in logistics operators and distribution networks. This is the case of our express paleteria network: Palibex. On a daily basis, the vehicles of each delegation take their customers’ merchandise to the central warehouse in Madrid, destined for all points of the Peninsula. From there, every night, hundreds of pallets are unloaded from their original vehicles and taken to their corresponding departure docks.
At each departure dock, they gather the goods from the rest of the Spanish delegations with which they share the destination area, to fill the return trailers. This shipment consolidation process is what allows customers to ultimately take advantage of economies of scale, optimizing vehicle space and the amount of merchandise transported.