Cross-docking: what is it?
The word has English origin and literally translates as “direct docking”. Cross-docking is method in logistics in which re-picking, assembly of goods from several suppliers and other procedures are conducted during the process of loading goods into vehicles. In simple terms, cross-docking lacks a warehouse element: products are not stored there for a long time as opposed to the classical method of supply chain management.
For whom is the cross-dock method suitable for?
Cross-docking is not a service that is suitable for every business.The method is optimal to use for those who:
- plan to transport products in small volumes, but in a varied assortment.
- work with multiple suppliers.
- is engaged in the sale of first necessity products, mass consumption, perishable food products (meat, fish, fruits, vegetables, etc.)
- organize the deliveries that are strictly scheduled in time.
- work with products that do not need to be checked for safety.
As a rule, the cross-docking method is chosen by companies that work according to the “Just in Time” principle.
One of the most important advantages of cross-docking is an increase in delivery speed up to 30 %.
- Simplifies the logistics of an enterprise which allows to track efficiency at any link in the supply chain.
- Increases the speed of order delivery to the end consumer which has a positive effect on the customers loyalty to the company.
- Allows to exclude significant costs for products storage. There is no need to buy or rent a warehouse for organization of products supplies.
- Reduces the risks of receiving the spoiled products – the goods are sent to the end consumer in the minimum short terms.
However, in order to organize this method of work, you need additional storage space without barriers (racks, pallets, etc.), specialized equipment for loading/unloading, convenient accesses to the warehouse with dock shelters and dock levelers.
Competent consolidation and management of traffic flows, availability of reporting and automation systems in the warehouse has also the great importance in cross-docking organization.
To organize the supply chain management with the help of cross-docking is not an easy task for small and medium businesses. In most cases, the companies apply for a service to the complex logistics providers, 3PL operators. Since an organization that cooperates with a 3PL operator in a cross-docking format cannot control the quality of incoming products, it is necessary to choose a partner for cooperation seriously. It is best to give the preference to a logistics provider which has implemented a Warehouse Management System.
Competent consolidation and management of traffic flows is also of great importance in organizing cross-docking; availability of reporting and automation systems in the warehouse.
For small and medium businesses, cross-docking supply chain management is not an easy task. In most cases, companies turn to integrated logistics providers, 3PL operators for the service. Since an organization that cooperates with a 3PL operator in a cross-docking format cannot control the quality of incoming products, it is necessary to seriously consider the choice of a partner for cooperation. It is best to give preference to a logistics provider that has implemented a Warehouse Management System.
Cross-docking: examples and schemes of usage
Method of cross-docking can be optimized to meet the specific business needs. Today there are differentiated 2 methods of work in cross-docking.
The cross-docking method in the practice of logisticians is divided into 2 types:
- One-stage. This type of cross-docking means that the goods are brought to a warehouse or distribution center, then they are immediately loaded into a vehicle and taken to their final point.
- Two-stage. In this scheme before the goods are loaded into the vehicle for delivery, it is completed with products from another supplier.
If to describe the cross-docking chemes briefly, they will look like this:
- One or more suppliers send the products to the warehouse by vehicle.
- Shipment of goods to another vehicle for further delivery (the first 2 points work with a one-stage type of cross-docking).
- If the process takes place in two stages, the next step is consolidation. The products from another supplier are supplemented to the batch that is on the delivery vehicle. The third step also can be deconsolidation, when the goods from different suppliers are packed separately.
- The distribution of goods by vehicles that are most suitable for the transportation of a specific type of products.
The cross-docking procedure can be schematically shown in the picture:
In Ukraine the cross-docking services are most often used by large retail stores, such as Auchan, Varus and many others. All the major retailers give the cross-docking for outsource to 3PL operators.
3PL operators calculate the cost of cross-docking individually: it depends on the type of cargo, volumes of supplies, the number of stages in chain, necessity of additional services provision.
The cross-docking services on WareTeka are offered by the largest 3PL operators. You can choose a reliable partner.