Cross-docking is a freight logistics practice of unloading goods from an incoming transport vehicle (e.g. 18 wheeler trailer, truck, rail car, etc) onto a distribution docking terminal and loading them directly onto another outbound transport vehicle with no warehousing or storage in between.
This may be done to sort products intended for a variety of destinations or consolidate products coming from different origins for shipment to similar destinations. Cross-docking is also referred to as “hub and spoke”.
Who Should Consider Cross Docking?
- Companies that don't want to have to manage and rent industrial space themselves
- Those wanting a central location for materials to be sorted and similar goods combined to deliver to multiple locations as quickly as possible.
- Companies wanting to getting hot products to customers more quickly
- If your products are already tagged, bar coded and ready for retail sale
- Those needing to break down (deconsolidate) large pallets into smaller ones for easier delivery to customers in different locations
- Those needing to consolidate smaller shipments into larger ones for delivery to the same locations to save on transportation costs.
Advantages of Cross-Docking
- Supply chain is more stream lined from point of origin to point of sale
- Lower inventory handling means lower labor costs
- Storage times are reduced thus a reduction in inventory holding costs
- Materials will reach the distributor and customer much faster
- You won't need to rent and manage as much warehouse space or not at all
- Less inventory handling means less risk of damaged goods
- Can combine smaller shipments into one larger shipment and save on transportation costs
- Large shipments can be broken down to smaller lots to make it easier for delivery
- By avoiding renting your own warehouse you eliminate the need for staff, security, warehousing fees, and pallets
- You can reduce your labor costs
- Better for the environment as fewer overall resources are needed
- Can more quickly transport unpreserved or temperature controlled products such as food
Disadvantages of Cross Docking
- Need to have adequate transport vehicles
- May need a computerized logistics system
- More inventory handling can lead to higher product damages
- Some partners may not have cross docking options
- Continuous communication is key between distribution centers, suppliers, points of sale
When you run a business it can be hard to decide on how to allocate your resources. If you don't have the resources, time, or money to invest in renting warehouse space for your company then consider cross docking. One of the best ways to free up your time and resources, and cut costs is to implement a cross docking solution. Also a supply chain that is faster and more productive is an important factor to remain competitive.
Cross-docking will take extensive planning, communication, and cooperation with partners for it to work properly, however done correctly you will see significant improvements in handling times and efficiency.