What Is Cross-Docking? 4 Reasons Why You Must Opt for It
In a competitive market scenario, it is always advisable to adopt ways that increase efficiency and augment customer satisfaction. Cross-docking is one such logistics strategy that reduces delays in shipping and restricts the use of warehouse.
The inventory associated with warehousing is almost eliminated with cross-docking. In supply chain mechanism warehousing plays a significant role which adds to cost component and diminishes competitive advantage.
What Is Cross-Docking?
This is a logistics process wherein products from a manufacturing unit or supplier reach the customer directly with minimal or marginal storage time. It takes place in a distribution docking station or terminal that has minimal space for storage.
Products are received at one end of this cross-dock called the inbound dock and transferred to the outbound dock. The received materials are screened and sorted according to their destinations and carried to the outbound dock.
Types Of Cross-Docking
- Manufacturing – This process involves receiving of products required by a manufacturing unit. Products are received and sub-assemblies prepared for delivery.
- Distributor – In this type, items from different vendors are consolidated together and then delivered to customers. A very good example is the supply of automobile parts to an automobile parts dealer.
- Retail – In this case also, materials are sourced from different vendors and the collected items then delivered to retail outlets. Here the procurement is once again of two categories. The first category of goods is those that are needed daily like grocery, fruits, vegetables, and other fast moving goods. The second category of goods is those that are required once a year; for example, a Christmas tree. This category is bought once a year and is usually not stocked.
- Transportation – In this class of cross-docking, less-than-truckload shipments are combined together and delivered to customers. Small packaging industries use this method.
- Opportunistic – These are specific customer orders, where goods are received and shipped immediately without having to store the materials. The use of storage is totally ruled out.
Why Opt For Cross-Docking?
Cross-docking as a supply chain process is not a regular method of goods shipment.
Packaged products that are required to be delivered immediately are the most popular items of this procedure of logistics. Some of the reasons favouring this process are:
- Consolidation – When there are several smaller items that need to be consolidated before delivery to end user, cross-docking is really helpful. Cost on transportation is significantly reduced.
- Hub and spoke – Provision of a centralised site for gathering materials and then sorting similar items together before delivery to multiple destinations. Distribution is fast with cost optimized.
- Deconsolidation – Large product loads are broken down into smaller units for easier delivery to customers.
- Reduction in cost – A Lesser need of warehouse space for storage reduces operational cost which ultimately gives a competitive advantage.
Cross-docking is a highly effective way of reducing dependence on storeroom and warehouses. Logistics has become faster with the introduction of this procedure.