Cross-docking is actually a function of warehousing, says Roy Drake, owner of Dakota Warehouse.
“It’s parking two trailers next to each other at a dock. You pull items off of one truck and sit them on the dock,” he said. “Those items then get reorganized and put into the second truck.”
He said most food service shippers, including Sysco, US Foods and Food Services of America, that deliver to restaurants typically use this technique.
When a truck from one of these shippers arrives with food for multiple destinations, the products are distributed among different trucks to be taken to different places.
“We had a trailer come in here and they had a full trailer of beverages,” Drake recalls. “They couldn’t let it sit outside overnight otherwise it would freeze. So we unloaded it that night and reloaded it in the morning. That’s called a cross-dock, too.”
Warehousing is the actual storage of a product. The item or items may then sit for two weeks to two months or longer.
Then there are the hybrid situations
“We have lighting supplies for Wells Fargo. They get brought in here and we break two pallets into 10,” Drake said. “Then they go to different Wells Fargo facilities when it’s time for the install. That’s a combination of cross-dock and storage.”
To have several options available for customers is a necessity in his business. He said it’s typical of most warehouses to offer both cross-docking and storage.
“A normal cross dock situation is all ‘Less than Truckload,’ or LTL, carriers (like FedEx Freight),” he said. “They pull up to a true cross-dock facility where it’s just one great big building with a bunch of dock doors.
“They pull the product off one trailer and put it onto another truck, then reroute it all. That is called a cross-dock facility.”
For Dakota Warehouse, the amount of cross-dock volume depends on the particular week. Drake said they handle about 20 pallets a week right now, but could definitely go higher.
“We’re new and we’re probably only 20 percent full,” he said, “so there’s a lot of room for expansion.”
Dakota Warehouse is a business-to-business entity but also has private customers. For example, they have one pair of customers who have a hot tub and building materials for the new home they’re building in the warehouse.
Drake said they didn’t have room for it. But instead of renting a storage unit like U-Haul, they brought it to Dakota Warehouse.
In a storage facility you pay for the entire unit even if you only use half the space you rent. But at Dakota Warehouse, you would only be paying for the space while your product is there, using the space. Once your product is moved, you wont be paying for the space anymore.
“And we do all the work of moving it around. They don’t have to mess with any of that. They only pay for the space they actually use.
Advantages of Cross-Docking
- Streamlines supply chain from point of origin to point of sale
- Reduces labor costs because of less inventory handling
- Trims inventory holding costs by reducing storage times
- Products reach distributors and customers faster
- Cuts or ends warehousing costs
- Less risk of inventory handling
Disadvantages of Cross-Docking
- Potential partners may not have the necessary storage capacities
- An adequate transport fleet is needed to operate
- A computerized logistics system is needed
- Additional freight handling can lead to product damage
- Labor costs are also incurred because the moving and shipping of stock happens
Factors in the use of cross-docking
- Cross-docking depends on continuous communication between suppliers, distribution centers, and all points of sale
- Customer and supplier geography, particularly when a single corporate customer has many multiple branches or using points
- Freight costs for the commodities being transported
- Cost of inventory in transit
- Complexity of loads
- Handling methods
- Logistics software integration between supplier(s), vendor, and shipper
- Tracking of inventory in transit
Types of Cross-docking
Companies use the cross-docking option most applicable to the type of products they ship. Here are the five big ones:
- Retail Cross-docking: Gets products from several vendors which are then sorted onto outbound trucks for multiple retail deliveries. This method handles two product types – items sold daily, called staple stock, and large quantity products bought once, sold and not usually stocked again.
- Manufacturing Cross-docking: Receives purchased and inbound products required by manufacturers. Warehouses can prepare sub-assemblies for production orders.
- Distributor Cross-docking: Consolidates inbound products from different vendors into a mixed product pallet, which isn’t delivered until the final item is received.
- Transportation Cross-docking: Combines shipments from different carriers in the less-than-truckload (LTL) and small package industries to gain economies of scale.
- Opportunistic Cross-docking: Used in any warehouse, it’s the transfer of a product directly from the goods receiving dock to the outbound shipping dock to meet a known demand.
Products Suitable for Cross-docking
- Perishable items that require immediate shipping
- High-quality items that don’t require quality inspections when delivered
- Products pre-tagged (bar coded, RFID), pre-ticketed and ready for sale to consumers
- Promotional products and items to be launched
- Staple retail products in constant or low demand
- Pre-picked, pre-packaged orders from another plant or warehouse
A cross-docking system uses the best technology and business systems to create a JIT (just-In-time) shipping process. With incoming and outgoing trucking docks, a cross-docking facility like Dakota Warehouse can move products directly from receivables to outgoing shipping without long-term storage.
Through cross-docking, your business reduces the need for multiple shipping relationships and the high costs of smaller shipping systems.
Risk always increases whenever humans are involved. Cross-docking cuts out at least two steps when humans can create damage – the moving of products in and out of storage. With cross-docking, the product moves through a minimal number of hands.
The greatest benefit to your supply chain offered by cross-docking is the decreased time it takes to ship items. As soon as an item is ordered, you ship it. It reaches the warehouse, is moved swiftly and safely from one truck onto another and shipped to your customer.