What is so interesting about the warehouse industry is that there are so many methods of operation designed specifically to enhance efficiency and productivity based on the industries the warehouse serves.
For example, there is a logistics procedure used by many warehouses called “cross docking.” Simply put, it is a procedure in which suppliers or manufacturers send products to a warehouse that instantly turns them around and distributes them to customers or retailers without having to store them.
The term is actually quite descriptive of the concept. The product comes in to one segment of the docking area and goes out through another section of the same docking area.
The trucks or trailers that come to the warehouse to drop products off enter the segment of the dock that is dedicated to receiving products. The products are unloaded, sorted and screened to determine their destination and then transported to another end of the dock using forklifts, conveyor belts, pallet trucks or some other means of material transportation. The products are then loaded on to the appropriate trucks or trailers that have the assignment of delivering the shipments to specific retailers.
(Courtesy: Brooklyn Brewery at flickr.com)
Of course, not all warehouses can use this logistics strategy. However, it is ideal for warehouses that need to distribute products quickly. This can include such products as unpreserved or temperature-controlled goods like food or it can include prepackaged or presorted items ready for shipping.
The reason for the creation of the cross docking strategy is to:
· Provide a central location for products to be delivered and sorted and then combined with similar products that must be delivered to a variety of destinations in the most efficient and fastest manner. Many companies describe the process as a “hub and spokes.”
· Collect a large number of smaller products for loading into one style of transportation to save on transportation costs. Many in the distribution trade call this “consolidation arrangement.”
· Take in large amounts of products and break them down into smaller loads for easier delivery to customers. This is referred to as “de-consolidation arrangement.”
Advantages of Cross-Docking
There are a number of advantages to the strategy of cross docking that will make it attractive for warehouses to cater to a specific kind of customer. They include:
· Reducing handling.
· Eliminating the need to store products.
· The elimination of the need for a large warehouse.
· Minimizing labor costs because there is no need for workers to store, pick, and package products.
· Delivering products to customers quickly.
· Fuller loads for each trip allowing the warehouse to save in transportation costs and offer less pollution to the environment.
· An easier way to screen products for quality.
· The elimination of pick locations and order picking.
· The savings generated by cross docking terminals because they cost less to construct than common warehouses.
· A quicker turn over of products. Products usually spend less than 24 hours in a warehouse with cross docking.
· Assurance of more of a full load of products destined for the same end point.
Disadvantages of Cross-Docking
On the other hand, there are a number of disadvantages to cross docking. They include:
· A lot of management attention, time and planning to make it work effectively.
· The cost and time necessary to create a cross docking terminal.
· Suppliers who cannot deliver products ready for shipping.
· A sufficient number of trucks that can make a cross docking scheme operate smoothly.
· The involvement of a high volume of products that will make the venture cost effective.
· Relying on suppliers to deliver the right products in the right amount at the right time.