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Effective Cross Docking – Pre and Post Distribution

September 21, 2010

Cross docking is a relatively new logistics technique used in the retail and trucking industries to rapidly consolidate shipments from disparate sources and realize economies of scale in outbound transportation. The idea is to transfer incoming shipments directly to outgoing trailers without storing them in between.

Here’s how it works in a traditional warehouse, goods are received from vendors and stored in devices like pallet racks or shelving. When a customer (e.g., the consumer or perhaps a retail outlet) requests an item, workers pick it from the shelves and send it to the destination. In a cross dock, goods arriving from the vendor already have a customer assigned, so workers need only move the shipment from the inbound trailer to an outbound trailer bound for the appropriate destination.

One way to classify cross docking operations is according to when the customer is assigned to an individual pallet or product.

In pre-distribution cross docking, the customer is assigned before the shipment leaves the vendor, so it arrives to the cross dock palletized and labelled ready for transfer.

In post-distribution cross docking, customer orders are allocated and labelled at receipt. For example, a cross dock at a Distribution centre might receive 20 pallets of a single SKU without labels for individual Customers. Workers at the cross dock allocate and label the pallets for each Customer. Pre-distribution is definitely more difficult to implement because the vendors of the cross dock must know which customers of the cross dock need what before they send the shipment. This involves quite a bit of information transfer, system integration, and coordination. However this is very easy to do when conducted within the same group of companies because of shared data and IT platforms.

In practice operations require staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. If the staging takes hours or a day the operation is usually referred to as a “cross-dock” distribution centre. If it takes several days or even weeks the operation is usually considered a warehouse. Many organization use a mixture of warehouse storage and cross dock areas, this gives maximum flexibility and all the benefits.

Business Case

 • When cross docking replaces warehousing a number of benefits follow. These typically include reductions in inventory investment, storage-space requirements, handling costs, and order-cycle times as well as faster inventory turnover and accelerated cash flow.

• The benefits of therefore are well-aligned with the goals of lean supply chain management: smaller volumes of more visible inventories that are delivered faster and more frequently.

• These methods also help to reduce direct cost associated with excess inventory by eliminating unnecessary handling and storage of product. Less inventory means less space and equipment required for handling and storing the products. This also means reduced product damages and product obsolescence.

Influencing Factors

• Customer and supplier geography — particularly when a single corporate customer has many multiple branches or use points.

• Freight costs for the commodities being transported.

• Cost of inventory in transit.

• Complexity of loads.

• Handling methods.

Key Rules

 • Clear inbound information flows of what is due to arrive.

 • Clear outbound information flows of what, where and when goods need to be shipped.

• Clear product labelling and routing information on all pallet consignments.

• Visible floor layouts, processes and systems.

• Well laid out visible floor areas to enable management by sight.

 • Clear floor policy at end of shift periods.

• Consignment & pallet tracking can be conducted manually or via your current warehouse management systems.

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From → Dominic

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