Intense competition, rising customer expectations, and the need to control costs all put pressure on businesses to operate their supply chain and fulfillment processes more efficiently. Cross-docking is an interesting supply chain management strategy that many businesses are implementing. Here’s what you need to know about cross-docking and how it can cut down on your business’s inventory costs and storage needs.
What is Cross-Docking and How Does It Work?
Cross-docking is a supply chain and logistics strategy that involves directly transferring goods from inbound railcars or trucks to outbound vehicles with the aim of increasing efficiency and accelerating product delivery. Usually, there is little or no storage time between these transfers, so there is the potential for savings in many areas. However, cross-docking also requires that businesses have close coordination with supply chain partners and be incredibly efficient in-house.
Different Cross-Docking Strategies
Cross-docking has become an increasingly popular supply chain strategy. Some of the businesses currently using include Amazon, Walmart, Roche Diagnostics, and Mainfreight logistics. Here are some of the different cross-docking strategies being used:
True Cross-Docking
Using this strategy, products enter the warehouse and are immediately loaded onto outbound vehicles without being stored. This requires careful coordination and planning to ensure everything runs smoothly.
Consolidation
In consolidation cross-docking, products coming from several different suppliers are consolidated in a staging area to create a single shipment for a designated customer. Placing the loads from multiple suppliers into a single outbound shipment can save the warehouse time and money.
Deconsolidation
Deconsolidation cross-docking is the opposite of the consolidation strategy. With this approach, a full shipment arrives at the warehouse from a supplier, where it is then broken down into smaller shipments to be sent back out of the warehouse across multiple delivery routes.
How Cross-Docking Cuts Down on Inventory Costs
Cross-docking is often confused with dropshipping. While they have similarities, they aren’t the same. Dropshipping involves fulfilling customer orders directly from a supplier without storing inventory. With cross-docking, the items still come into your warehouse, but are directly transferred to outbound transportation with minimal storage time.
Cross-docking can streamline your logistics and order fulfillment process, reducing storage and inventory handling costs. This is particularly useful for businesses with tight delivery schedules and high-volume shipments.
Labor costs are likely some of your warehouse’s highest costs, especially if you have a large facility or many different locations. By using cross-docking, you would need fewer workers because the process reduces or eliminates storing items on shelves. This would also eliminate the need for widespread picking operations. To ensure the most accurate and efficient inventory cataloging, it’s critical to implement the right technology solutions, such as RFID codes for real-time tracking and recording.
Reducing Your Storage Needs With Cross-Docking
This strategy is referred to as cross-docking because products “cross the docks,” moving from arriving vehicles to departing ones. Because of how the approach is designed, it makes sense that you wouldn’t need as much storage space in your warehouse.
It would likely be a mistake, however, to eliminate all of your warehouse and storage space. You will still need space to store items that are moving from arriving trucks straight to retail stores or consumers. You also need to allocate space in your receiving area to process the items being cross-docked. You can streamline this process using automation tools and mobile powered carts, which bring the technology to the place where the work is being performed.
What you won’t need is space for all the orders arriving at your warehouse and going straight to consumers or retailers. That means you can still significantly reduce your storage needs.
With less storage space, you save money on rent and other costs like property taxes, insurance, utilities, equipment, and even labor.
Implementing Cross-Docking in Your Warehouse
Using cross-docking in a warehouse isn’t just about making a few layout changes, although the proper physical layout is important. It also requires careful coordination and planning to ensure long-term success. Here are some key steps to consider:
1. Consider Your Product Offerings
Cross-docking is the ideal solution for high-turnover products, such as items with a lot of demand or perishable goods. Your first step should be to evaluate which items in your product mix will be most suitable for a cross-docking strategy.
2. Coordinate With Partners
A successful cross-docking strategy depends on real-time visibility and precise timing. Develop strong connections with partners to ensure inbound shipments arrive as scheduled. Integrate tracking systems wherever possible to provide the data you need to make the most informed decisions.
3. Optimize Your Space
You’ll likely be able to reduce your warehouse space dedicated to storage, but will need to optimize your receiving, shipping, and processing spaces in between those two areas. Make sure the space makes sense for cross-docking and you have room to process items and temporarily store them if necessary.
4. Invest in Technology
Automated sorting solutions, real-time tracking systems, mobile-powered carts, and warehouse management systems can help ensure there is an efficient transition between your inbound items and outbound ones. Investing in these solutions can also help reduce errors and save costs.
5. Train Your Staff
It’s critical that your staff be both knowledgeable and efficient for cross-docking to be successful. Provide your team with the resources and training it needs to handle the complex and fast-paced environment of cross-docking.
If you’ve had enough of an inefficient and costly supply chain or warehouse, you may want to consider cross-docking. This approach to inventory handling and order fulfillment can significantly reduce costs and your warehouse’s storage needs. To achieve these benefits, you must approach cross-docking with the proper strategy, such as using technology solutions and mobile powered carts to improve efficiency.
|
10 Tips to Improve Your Warehouse Receiving Process |
