Cross-docking is a logistics strategy that keeps supply chains moving in a productive, effective manner. In this practice, cargo is immediately unloaded from an incoming container and then loaded directly to an outbound carrier.
Instead of a standard distribution center (DC), cross-docking facilities are more of a “sorting center”; a place where goods quickly pass through. Cross-docking facilities require far less storage space than a DC. The docking terminal consists of inbound and outbound lanes. Inbound shipments are assigned to a receiving dock and then the products are either moved directly to outbound destinations on forklifts or conveyor belts, or sorted and consolidated before making their way to outbound shipping. The goods usually spend less than 24 hours within a dock terminal.
Cross-docking seems to be a universal upgrade for the supply chain. However, there are some industries that especially benefit from this method, they include:
-Perishable goods, foods and beverages
-Inbound supplier components and raw materials
-Already packed and sorted products, parcels
Cross-docking is cost-effective for a company with high-volume shipments and substantial transportation needs – otherwise, shipping won’t be smooth or fast. Cross-docking requires a heavy investment in automation, visibility, outbound and inbound logistics.
The 3 types of cross-docking are:
1. Continuous Cross-Docking
The simplest and fastest cross-docking process. It provides a central site for products, so they are immediately transferred from an inbound truck to an outbound truck. If trucks arrive to the terminal at different times, they will incur a waiting time.
2. Consolidation Arrangements
The process of merging several smaller product loads into one truck or one big load in the dock facility. This way, incoming freight is combined with goods stored at the terminal to form full truckload shipments.
3. Deconsolidation Arrangements
This process is the opposite of consolidation arrangements. Large product loads are broken into smaller loads for easy transportation. Usually, these small loads are shipped directly to a customer.
Moving from traditional DCs to cross-docking facilities would enable a company to increase inventory turns and reduce material handling and distribution costs. Effective cross-docking leads a business to cost savings by eliminating the need for warehouse space and labor costs (less packaging and storing).
Trucking companies love cross-docking because trucks have fuller loads and exact destinations for each shipment which saves transportation costs. With cross-docking, a shipper can adapt quickly to new selling channels and market conditions; this shipping method reduces overall time to reach each customer.
Although cross-docking delivers significant financial and operational advantages, to achieve effective performance, companies must implement proper tracking, auditability and compliance. Just like other data-driven supply chain practices, cross-docking requires control and visibility of shipment from supplier to end customer. For more information about how PLS can help your company with customized logistics solutions and supply chain design, click here.