What are the benefits of cross docking services (cross docking)? The benefits are numerous for anyone considering the implementation of an advanced shipping methodology that can save time and money.
Benefits of cross docking include:
- Quick turnaround time
- Reduced transport costs
- Reduced inventory storage
Cross docking services are ideal for businesses needing to split full containers or truckloads into multiple LTL shipments and have them delivered in a cost-effective and timely manner.
Using the best option for getting your goods from point A to point B in the fastest and safest way possible is most important. Find out more here.
What is Cross Docking?
Cross docking is a service that takes a very different approach to traditional warehousing and distribution. Cross docking skips the concept of holding high-volume inventories as a buffer to maintain product flow.
This form of freight transport handles all products, such as raw and partial materials for manufacturers to finish products ready for store shelves. Supply and demand are instead synchronized and ordered as needed, which negates the need for inventory buffering.
The entire purpose of cross docking is to provide maximum speed, accuracy, and cost-saving measures. Cross docking as a service is carried out in a warehouse-like environment centered around inbound and outbound docks.
This environment is known as the cross docking terminal. This facility can also exist along a rail line or port. There is generally no difference between truck, rail, or port cross docking terminals other than the inbound and outbound vehicle types.
The unloading, screening, sorting, and reloading process remains the same. Advanced logistical technologies are employed to help facilitate cross docking procedures.
Two technologies that help provide accurate information up to the minute while supporting cross docking efforts include:
- Advanced Shipping Notice (ASN): An ASN is an electronic document that provides detailed information about pending deliveries. The reasoning for giving a customer an ASN is to prepare them to accept the delivery and be aware of its characteristics.
- Electronic Data Interchange (EDI): An EDI is the exchange of information between computer systems. The reduced cost of digital exchanges vs physical and the speed at which digital vs physical documentation passes are a no-brainer.
Ultimately, cross docking facilitates the transport of goods cheaper and faster while reducing the need to carry long-term, large-scale inventories.
Benefits of Cross Docking
The advantageous nature of cross docking occurs when a retailer orders products sent directly to stores from suppliers. A primary advantage of cross docking is that it promotes greater throughput and eliminates the need for opening up new distribution centers (DC) or warehouses.
Costs associated with storage and handling are minimized while deliveries are made faster and less time is spent in a facility. The automation of the warehouse receiving processes reduces costs while increasing productivity simultaneously.
Also, when an inbound truck picks up freight from a supplier on a return trip, it eliminates “empty miles.” Cross-docking creates advantages for both suppliers and retailers/DCs, as illustrated here:
|Advantages for Suppliers||Advantages for Retailers & DC|
|Reduced need for order fulfillment||Discounts through bulk ordering|
|Improved fulfillment timelines||Reduced labor via inventory management|
|Reduction in overall transport costs||Reduction in transport costs for freight|
|Consolidation of ASN data||Reduced warehouse costs|
|Eliminates the need for single store delivery||Eliminates the need for new facilities|
|Less EDI charges with consolidated orders||Reduction in an active safety stock|
Drawbacks of Cross Docking
It is paramount to understand that cross docking has its disadvantages. If you are to overcome any barrier to the service, you must be aware of the associated costs and time investment required. Having a trusted third-party logistics (3PL) partner can alleviate any disadvantage instantly.
Regardless, cross docking does save money on labor, transport, and warehousing, there are several disadvantages that you should understand. However, these downsides are not the result of cross docking but merely things to consider.
Advanced equipment is necessary for material handling in the fast-moving day-to-day operations of a cross docking terminal. The employment of advanced technologies is also essential to bring your operation into the modern era of accuracy and expediency.
Outlined here are some topics related to the pitfalls of cross docking when not using a trusted 3PL partner:
- Capital Investment: Without a trusted and reliable 3PL, the capital required to implement cross docking is expensive. Installing a structure conducive to the transfer of product and the traffic of transports is necessary for smooth operation.
- Time Consumption: A successful cross docking operation requires proper planning and organization. While cross docking is faster and more efficient, it takes a skilled hand to administrate and facilitate day-to-day operations.
- Reliable Transport Carriers: Cross docking heavily relies on trucks, storage, and maintenance. While the efficiency of the inbound and outbound rapid traffic system saves on cost, workforce, inventory, and storage space. It takes a fleet of vehicles to make this all happen.
- Trust in Supply: To keep supply turning, reliable supply for inbound and outbound freight trucking is needed. Suppliers must deliver the correct quantity and item every time. The margin for error in cross docking is paper-thin. Errors can reduce productivity and create unwanted costs.
Cross Docking Warehouse Applications
The advantages of utilizing cross docking in a warehouse are clear. The logistical procedures are cost-effective, with turnaround times less than 24 hours.
This approach aims to give a decisive advantage to the acquisition and distribution of goods. The traditional warehousing system requires that there is a product on hand to ship to customers.
The advantage of the cross docking warehouse rests solely in utilizing technology and systems that cut the traditional process entirely out. In this system, the product is moved directly from receivables without needing a long-term storage solution.
There are distinct advantages associated with cross docking warehouses that you cannot overlook.
- Reduced warehouse operating costs: There is less need for additional equipment or machinery related to extensive long-term storage.
- Reduced warehouse labor costs: There is less need for additional labor due to a smaller stored and managed inventory.
- Logistical Strategies: Organized supply lines and a steady flow of inbound and outbound trucks make for an excellent logistical strategy.
Advantages of Software Systems
Implementing warehouse management systems (WMS) and warehouse execution systems (WES) is critical for cross docking. They aid in meeting the ever-present challenges of cross docking services while providing the accuracy and proficiency required.
- Warehouse Management Systems: This WMS program manages inbound inventory management and outbound fulfillment. The software also tracks inventory within locations of the warehouse.
- Warehouse Execution Systems: This WES program manages order fulfillment by processing orders and offering resource allocation within the system. The software can calculate an order priority and predict demands. These tasks get performed while also balancing all automated systems and functions.
The connection of these software systems, while challenging, presents a decisive advantage to the function and flow of a cross docking warehouse. The capability of these systems is astounding as they stand out to provide a front-to-back view of the entire cross docking process.
Does Cross Docking Work for eCommerce?
Retail eCommerce grows exponentially year-over-year around the world. The eCommerce industry has been chipping away at brick and mortar businesses steadily and has no signs of slowing down.
For this reason, many companies are switching to an eCommerce model. A prominent advocate for this trend has been cross docking services, allowing for faster and more efficient businesses.
Getting goods to a consumer quickly while ensuring the correct item is delivered is crucial to eCommerce. Traditional warehousing is not effective enough to impact this space in a meaningful way.
Cross docking provides a distinct advantage over the competition in ways that help your business grow, meet consumer demand and increase your revenue stream. Keeping pace with demand surges on goods can be a constant struggle.
Implementing a cross docking service is required if you are in the eCommerce industry, primarily due to the need for speed. Ordering what's needed fast and in bulk can keep you one step ahead of your competitors.
The information gathered in this table illustrates a year-over-year revenue stream for eCommerce with the help of cross docking services. They play a significant role in keeping up with both demand and product flow of the goods in eCommerce.
|Recorded Year||Revenue||Percent Increase|
|2018||$468.1 Billion||10.17 %|
|2019||$516.5 Billion||10.34 %|
|2020||$644.4 Billion||24.76 %|
What is an Effective Cross Docking Strategy?
Cross docking proves to be a consistently effective strategy in supply chain management and distribution. Also, advanced technologies solidify cross docking as the go-to solution in just-in-time (JIT) delivery times while making good on its benefits.
Cross docking is exceptionally complex and relies on steady supply, reliable trucking, up-to-date technologies, and precision handling. The use of an effective cross docking strategy is essential to any business looking to maximize profitability and customer satisfaction.
Distribution Cross Docking
Distribution centers can serve as cross docking terminals with limited storage time and capacity. Also, cross docking can occur at large distribution centers and warehouses too. The practice of cross docking remains the same.
The distribution cross docking will change depending on your location and business type. These examples illustrate different forms of cross docking services that serve as an advantage to distribution services.
- Hybrid Cross Docking: This cross docking strategy utilizes the storage of items in both the long and short term. Cargo is rotated with both short and long-term goods, resulting in mixed caseloads while retaining quality.
- Opportunistic Cross Docking: In this scenario, traditional warehousing is the priority method. However, this form of cross docking will occur when late deliveries arise or when a customer pays for rushed shipping.
- Consolidated Cross Docking: When multiple forms of incoming shipments arrive at a distribution center, they are then consolidated and prepped for outbound shipment. This form of cross docking typically rests near ocean port or rail access. There is very little need to store goods as they are sorted and prepared for outbound shipment.
Any application of these cross docking strategies will provide a distinct advantage to any warehouse. The most common form of distribution cross docking is the hybrid and opportunistic approach. The number of distribution centers with only cross docking facilities is on the rise. While an expensive option, a trusted 3PL can offer the same service at a fraction of the price.
Want to know more about the costs involved in cross docking? Check out our article on cross docking rates.
Supply Chain Cross Docking
This form of cross docking usually follows two styles: The “hub and spoke” and “single-channel point to point” methods. These forms of cross docking are highly effective and unique to their specific use case.
- Mixed Case Level: In this form of cross docking, incoming loads are screened, unpacked, sorted, and loaded as outbound freight to customers. This level will require a more significant labor force to execute effectively.
- Load Unit Level: In this form of cross docking, there is little to no cargo handling other than moving them off an inbound truck. After that, the cargo transfers to an outbound delivery system. This outbound system is often a truck or rail vehicle.
- Case Level: The shipment gets dispatched in individual or bulk cases in this form of cross docking. All inbound shipments are offloaded and broken down, then shipped out individually. This concept generally suits retail distribution.
A supply chain strategy involves implementing various techniques and methods that sometimes occur in the same facility. The advantages of this form of cross docking rest solely with the execution and continuous management of the facility and its operations.
Get a Cross Docking Service With Transload Services USA
Transload Services USA, powered by R+L Global Logistics, provides 3PL warehouse solutions for businesses in today's fast-moving market. We offer a stress-free solution that takes the burden off you and demonstrates the benefits of cross docking designed to improve your business.
As a 3PL, we can easily handle everything for you, including shipping, distribution, and warehouse management. R+L Global Logistics delivers the best in reliable labor, strategically located facilities with unmatched customer service.
Our unmatched level of service and care will go the extra mile for your business. We offer experience, dedication, and a philosophy that sets us apart from the competition while driving us to be a true partner in lifting the success of your business. Some of our other services include:
Contact us today at (866) 757-1109 or get a quote online and get your products on the move.
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