Cross docking is a logistics method in which the carrier immediately unloads the cargo from an entering container and then loads it directly to an outbound carrier, also known as from dock to dock. It is a practice that keeps supply chains moving in an effective and productive manner. Rather than a standard distribution center (DC), cross-docking facilities are more of a “separating center”; a place where goods quickly pass through.
Cross docking warehouses take much less storage space than a DC. The docking station consists of inbound and outbound lanes. So, inbound cargos go to a receiving dock and then the goods go directly to outbound destinations on conveyor belts or sorted and amalgamated before making their way to outbound shipping. Usually, the products spend less than 24 hours within a docking terminal.
Moving from traditional DCs would enable a company to increase inventory turns and reduce distribution and material handling costs. Effective cross-docking leads a business to cost savings by reducing the need for warehouse space and labour costs (less packaging and storing). This method seems to be a universal advancement for the supply chain. However, there are some industries that benefit from this method, they include:
- Foods, beverages and perishable goods
- Raw materials and inbound supplier components
- Parcels, already packed and sorted products
Cross-docking has a variety of benefits, the primary one being a re-structuring of the supply chain. Without the need for a real distribution center, warehouse storage and management costs become no longer a factor, and the product is moved quickly step by step in the supply chain.
Less inventory handling leads to reduction in labour costs, as well as reduction in the risk of damage in the inventory handling phase. A reduction in inventory handing costs is another cost-benefit, and reduction in storage times and faster processing, products reach to the distributor and the end consumer quicker.
However, there are some risks associated with cross-docking…
It’s important, that companies want to adopt cross-docking in order to re-structure their process, must understand the initial costs and requirements for executing it properly. A computerized and well-maintained logistics system needs heavy investment in automation, inbound and outbound logistics, visibility, and an adequate transport fleet. Proper tracking is important for overall functioning as well. There are some potential risks associated with additional freight handling and labour costs associated with moving and shipping the goods.
It is cost-effective for a company having high-volume shipments and substantial transportation needs otherwise, shipping won’t be fast and smooth. Also, the method requires a heavy investment in inbound and outbound logistics, automation, and visibility.