How Cross Docking Is Used for Efficient Logistics

In logistics, the ability to control the pace, measure the quantity and ensure quality in all the steps involved in supply chain operations is beneficial to individual businesses. This makes cross-docking one of the ways to achieve speed and productivity while also cutting costs.

In this article, we discuss how cross docking is used for efficient logistics. If you’d like to speak to an expert at the MacMillan Supply Chain Group about your logistics needs, we’d love to hear from you. You can reach us at 416-941-2759 or by clicking here.

What is Cross Docking in Logistics?

Cross-docking is a refined and customized logistics strategy in which goods from a manufacturing plant or supplier are unloaded from inbound delivery trucks and loaded directly onto outbound trucks with little to no intermediate storage. Cross-docking usually takes place in a dedicated docking terminal consisting of an inbound dock and an outbound dock. Unlike a standard distribution center, a cross-docking facility serves more as a sorting center where goods quickly pass through to the next stage of the shipping process.

In a cross-docking warehouse, inbound goods go to the receiving dock first and are then sorted according to their final destination. The goods are then moved to the other side of the dock via conveyor belts, pallet trucks or other types of equipment and loaded onto the outbound shipments. The cross-docking process generally takes less than 24 hours after goods arrived to complete.

Setting up a cross-docking facility requires significant planning and design with careful and close monitoring to ensure it is giving intended results from suppliers to end customers. To ensure there are enough delivery trucks to deliver goods efficiently to consistently meet customer demands, cross-docking also requires maintaining a large number of couriers. In a bid to offset the pressure that comes with cross-docking operations, most businesses rely on the support logistics provider brings to the table. We at Macmillan Supply Chain Group offer supply chain design and time-critical logistics solutions where needed, to help gain more visibility and control over all shipment processes from supplier to end customer.

Industries That Benefit Most from Cross-Docking

Cross-docking works best with products that need to be transported quickly, such as perishable goods, foods and beverages, fast-moving consumer goods already packed and labelled, and goods that do not need product quality control and inspections or have consistent demand.

Some manufacturers switch from traditional warehousing to cross-docking facilities, moving finished goods directly from production to outbound shipments without first storing them in the warehouse. This improves inventory management and helps reduce associated costs by eliminating the need for warehouse space and labour. It reduces other order fulfilment costs because of less picking and packaging and storage space needed. Industries that significantly get the competitive advantage of cross-docking more than others despite it being a universal upgrade for the supply chain are retailers, fast-moving consumer goods, automotive parts companies, chemical companies along with the food and beverage industry.

Generally, cross-docking is highly cost-beneficial and time-saving for any business with substantial transportation and high-volume shipment needs.

Benefits and Risks of Implementing Cross Docking

Before adopting cross-docking services, it is essential to know the benefit and risks that come with it.

The Benefits

Cross-docking provides a variety of advantages:

• It reduces delivery times making products reach the end consumer faster, hence ensuring top-notch customer service.
• Reduction in risk of damaging goods due to less inventory handling. Another cost-benefit is the reduction in inventory holding costs since goods don’t require long-term storage.
• Without the need for a true distribution center, warehouse costs, storage space and cost are minimized.

In essence, efficient cross-docking saves overall costs by streamlining the supply chain. However, there are some risks affiliated with switching to a cross-docking;

The Risks

• It requires a digitized and well-maintained logistics system which is costly to set up.
• It requires an automated transport fleet and warehouse management system for overall efficiency.
• It requires proper tracking of inbound and outbound logistics for adequate coordination.

Methods of Cross Docking

There are three primary methods involved in cross-docking: continuous cross-docking, consolidation arrangement and deconsolidation arrangement.

1. Continuous Cross-docking

This is the most straightforward of the three methods. Continuous cross-docking involves the continuous movement of products and freight loads to a central location where these products are immediately transferred from an inbound truck to an outbound truck. It is the fastest method, however, trucks arriving at the terminal at different intervals will incur a waiting time.

2. Consolidation Arrangements

In the consolidation arrangements method, several smaller products or freight loads are merged into a larger load in the cross-docking facility. Goods stored at the minimal storage in the terminal are combined with incoming inbound freight to form full truckloads shipments. This method come in handy when individual parcels are to be distributed to different retail stores. Despite the delay in shipping that may come with adopting this method, when a load must be full before being shipped out, it has been neutralized by the reduction in shipping costs.

3. Deconsolidation Arrangements

Rather than combining smaller loads into a larger one, deconsolidation arrangements are the opposite, in the deconsolidation method, a large product load is broken down into smaller ones for easier transportation to the individual customer. This arrangement is traditionally implemented in direct-to-consumer order fulfillment.