Cross-Docking Distribution Center (DC)

Three ways for the distribution1.Traditional Warehousing/Distribution, in which vendors ship goods to retail DCs, where the goods are stored until store orders need fulfilled, where they are then picked (often using a "wave" process" for batches of stores) and delivered to the stores.2.Crossdock DCs, in which shipments from inbound suppliers are moved directly to outbound vehicles, with very little if any storage in between. In the best possible situation, products never touch the floor or a shelf, though some amount of staging is often used.3.Direct to Store Delivery, in which vendors ship goods directly from their own facilities to retail store outlets.

The trade offs of crossdockingTraditionalCrossdockDirect to Store Delivery

Cross-DockingCross-docking favors the timely distribution of freight and a better synchronization with the demand. It is particularly linked with the retail sector (often within large retailers), but can also be apply to manufacturing and distribution. Cross-docking is mainly dependant on trucking.

Advantages of Cross-DockingMinimization of warehousing and economies of scale in outbound flows (from the DC to the customers). The costly inventory function of a DC becomes minimal, while still maintaining the value-added functions of consolidation and shipping. Inbound flows (from suppliers) are thus directly transferred to outbound flows (to customers) with little, if any, warehousing. Shipments typically spend less than 24 hours in the distribution center, sometimes < 1 hour.

Direct to Store DeliveryLTL Less than Truckload

Cross-DockingTL Full Truckload

Cross-Docking DCSuppliersCustomersReceivingShippingSorting

Pre- and post-distributionIn pre-distribution cross-docking, the customer is assigned before the shipment leaves the vendor, so it arrives to the cross-dock bagged and tagged for transfer. In post-distribution cross-docking, the cross-dock itself allocates material to its stores. For example, a cross-dock at a Wal-Mart might receive 20 pallets of Tide detergent without labels for individual stores. Workers at the cross-dock allocate 3 pallets to Store 23, 5 pallets to Store 14, and so on.

CommentsPre-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.

The Cross-docking requirementsThe systems for a successful cross-docking on a large scale include: automated material handling, warehouse management systems (WMS), order processing systems, quality controls systems, strong relationships between supply chain partners.

Automated material handling systemsAn automated cross-docking system typically consists of a series of conveyors for receiving and sorting cases. Barcode scanners read an identification code on each case to track the product through the cross-dock system and, based on information from a WMS or an order system, the automated system sorts the cases to trucks or pallets for shipping.Bartolini Roma Sorting.wmv

Warehouse management systemControlling the flow is critical in cross-docking. A WMS accomplishes this by receiving product information via WEB or EDI and keeping track of product movement. It supports the real-time requirements of cross-docking, receiving order details from customers and later informing them of the shipment's carrier and arrival date and time. The WMS also tracks warehouse performance, including labor and dock utilization.

Importance of tracking performanceCross-docking demands a reallocation of resources, shifting the emphasis away from storage and order picking to receiving and shipping. For example, peak workload may intensify because it's more difficult to evenly distribute workload in cross-docking. Thus, the peak workloads length and when it occurs must be studied to utilize labor and dock equipment most effectively.

The softwareBusiness systems may require special functionality to efficiently allocate inbound goods to existing orders, matching supply to demand. Some WMS permit opportunistic cross-docking functionality to allocate received product to current demand in real-time. And there is little stress on software systems when buyers predetermine distribution for special purchases or seasonal items.

Quality control (QC)Stringent yet agile operations are increasingly important as the volume of cross-dock business increases, especially when handling new suppliers. Good QC is essential to avoid delays, bottlenecks, or the costs associated with shipping inferior product.

Partner relationshipsFailing to establish a good working relationship with your supply chain partners can lead to failure in a cross-dock endeavor.The sharing of information, clear communication, confidence in the quality and conformance of goods, and product availability are a few characteristics that produce effective cross-docking.

The planAlthough the concept of cross-docking is simple, its implementation is complicated. Careful preparation is a must. Logistics managers who want to switch to this rapid system have to first establish a formal plan, including starting a cross-docking pilot program and evaluating its effectiveness.

The implementationOnce the plan is set, logistics managers must partner with other members of the supply chain to implement the system.Since cross-docking affects the entire supply chain, everyone's cooperation must be gained and adjustments made wherever necessary.

The cost structure adjustments For example, if manufacturing has to pay extra costs to enable cross-docking through the supply chain, then the manufacturing cost structure must be readjusted appropriately. This applies to every member of the supply chain, such as trucking and packaging.