Cross docking is an efficient shipping strategy for many companies. It’s also one of the most interesting parts of the supply chain process to learn about. Here’s why companies are opting to use cross docking services to achieve their shipping goals.
What is cross docking?
Cross docking is a direct-delivery strategy in the supply chain process that reduces material handling and eliminates warehousing. To set the scene, cross docking happens at the receiving or loading dock of a warehouse.
Basically, a third party owned warehouse (3PL) receives the inbound vehicle transporting goods and unloads the product. From here, the 3PL team will use cross docking methods to get the products on an outbound truck for that last stop in the order.
Producers and consumers are keeping pretty busy these days. Naturally, supply and demand is likewise keeping the supply end of the chain pretty busy (hi, e-commerce). Cutting out warehouse storage can be a sensible shipping solution that helps companies supply all of that demand while also preserving value of their goods and saving money. You’ve heard it before – time is money.
Logisticians (aka logistics managers, aka Puzzle Masters, aka Brain Teaser Extraordinaires) use scheduling and coordination to create cross docking strategies. Things can change on the dime at the warehouse. These folks think in real time about things like
- Planning how pallets/products are grouped and how they are allocated around the receiving or loading dock
- Scheduling arrivals and outbound transfers
- Task management and assignments
There are different types of cross docking
Opportunistic Cross Docking aims to meet a deadline or a customer sales order. Here, a company ships directly from a production facility to a warehouse. Then the goods are loaded onto the outbound vehicle for that last stop delivery.
Retail Cross Docking involves inbound goods from multiple vendors, think super stores like Target or Walmart. The 3PL team unloads the vehicle at the warehouse’s loading dock and strategically sorts and consolidates the product. Consolidated goods are sent on to their designated retail store. (I made you a diagram below)
Manufacturing Cross Docking is used in a company’s product manufacturing process. A 3PL receives products from one manufacturing plant and uses cross docking to then send them to another manufacturing plant for further assembly.
Distributor Cross Docking is used when a sales order is comprised of products that are made come from different vendors. Vendors fulfill their portion of the order and when the goods arrive at the warehouse, the 3PL team depalatalizes the product, gathers and consolidates the components so to complete the customer order and packs it all back onto pallets. When they finish these puzzle-esque orders, they’re sent out on the outbound vehicle for delivery.
Transportation Cross Docking is used when an order has components that come from different supplier warehouses. The 3PL team sorts through the different suppliers’ inbound deliveries to consolidate all of the components of an order. Sometimes fulfilling these orders involve cross docking at multiple cross docking before the goods head outbound for delivery.
Why cross docking?
There are plenty of industry-specific reasons why a company will use a 3PL for cross-docking. But generally, if you want to avoid storing products in a warehouse, immediate shipping solutions might be your thing.
Imagine, for just one example, your small company’s products are pre-tagged (barcoded) or ready for sale. If you find that your turnover has increased since your original need for warehouse space, do a cost/benefit analysis and reevaluate your logistics plan.
Those warehouse in/out charges add up. If business is good and you’re pulling your pre-tagged product often, do the smaller quantities justify inventory costs? Reevaluation might indicate potential benefits to immediately shipping shelf-ready product. Perhaps opportunistic cross docking.
There may be less costly, more temporary storage that doesn’t involve a warehouse. Maybe you can just clean out your garage and store the goods there. I’m half kidding- you never know.
Sounds like #shippinggoals, right? But be careful
Last week I wrote about the importance of a 3PL’s commitment to optimization (check it out here). There are risks to cross docking and the immediate shipment process. Be sure the 3PL has what it takes to meet your shipping expectations.
Don’t catch yourself in a logistical nightmare! It is crucial that you use an experienced 3PL that uses dynamic cross docking strategies.
When you do, cross docking is a beautiful thing.
Are you interested in cross docking? Do you want to know more?
Learn about our services, here. We want you to be informed about shipping solutions and your options. RTD Logistics has the expertise and capabilities to help you understand what logistics services work best for your business.
Contact us today to talk about your logistics plan! Contact RTD Logistics, here.