Oct. 25 2007 05:36 PM

Success in business often hinges on the ability to be flexible in the face of new challenges. This is frequently true when it comes to managing a supply chain. For example, flexibility is often the key to finding efficiencies in an operation. Managing warehouses and distribution centers is no exception. Cross-docking is one way that you can apply a flexible approach to your warehouse operations and maximize efficiencies while minimizing warehousing, inventory and personnel costs.


What is cross-docking? According to Professor Kevin R. Gue of the Naval Postgraduate School, cross-docking is a technique used to rapidly consolidate shipments from disparate sources and realize economies of scale in outbound transportation. Cross-docking essentially eliminates the inventory-holding function of a warehouse while still allowing it to serve its consolidation and shipping functions. The idea is to transfer incoming shipments directly to outgoing trailers without having to store them. Shipments typically spend fewer than 24 hours at the facility, sometimes less than an hour.


Cross-docking uses loading and unloading docks in an existing warehouse facility in new, more efficient ways. Cross-docking is a method that allows a distribution center (DC) to more efficiently handle challenges, including seasonal fluctuations in a supply chain and less-than-truckload (LTL) shipments, while simultaneously reducing warehousing, operating and transportation costs. By utilizing existing facilities, a company can get the most out of its investment without capital improvement costs, while also maximizing the efficiency of its workforce.


Inefficient Warehousing Methods Hurt Your Business

Warehousing costs are frequently viewed as a necessary expense of doing business, but such costs add little or no value to a product. Warehousing merchandise slows the delivery process and requires more handling, payroll, infrastructure and facilities costs. The goal of any supply chain is to establish a timely, consistent and efficient standard for the delivery of materials. This has grown increasingly important as the demand for just-in-time (JIT) production and timely delivery has become exponentially more crucial in manufacturing and retail sectors.


Cross-docking is a simple idea, but its not easy. It directly attacks warehousing and DC costs by moving products directly from receiving to shipping with no interim storage. Several different methods of cross-docking can be used to improve your existing warehouse system.


The Basics of Cross-Docking

A basic cross-docking scheme has three parts. First, inbound shipments are received and unloaded. Second, those shipments are sorted in a consolidation/staging area that allows for easy movement to the loading dock. Third, shipments are loaded directly onto outbound trailers for delivery. Using a plan like this, full pallets can be transferred directly to the final recipient without breakdown. By organizing the flow of shipments through the warehouse, a company can utilize its existing infrastructure more efficiently.


Opportunistic cross-docking offers a simple technique: For this method, a shipping door is simply assigned the role of an unloading dock for materials destined for surrounding docks. Inbound trailers are staged in one shipping door and designated a pick location by the Warehouse Management System (WMS). Pickers are directed by the WMS to pick from this new location and to deliver the product to adjacent outbound trailers, resulting in reduced pick path and labor.


Flow-thru cross-docking provides a more refined approach: A more sophisticated example of cross-docking is called flow-thru cross-docking. This approach begins by breaking down loads at receiving, moving the materials via an automated system, sorting them for delivery and then shipping. This is accomplished without any storage.


The first step in a flow-thru cross-docking procedure is receiving freight, checking it for accuracy and preparing it for release to stores. Secondly, cartons travel through the facility on a conveyer system to reduce labor costs and increase the speed at which goods are moved through the warehouse. Thirdly, a barcode reader identifies and diverts cartons down the appropriate outbound loading lane. Finally, cartons are loaded into trailers and shipped when the shipment is ready for delivery.


Both opportunistic and flow-thru cross-docking improve results. In both of these scenarios, implementing a cross-docking design improves efficiency and cuts costs. Cross-docking speeds the flow of products from supplier to final destination. Labor costs are cut by eliminating storage and handling two expensive stops in the supply chain. It also reduces finished goods inventory in the system and transportation costs by avoiding multiple less-than-truckload (LTL) shipments. And, perhaps most importantly, it reduces the need for costly distribution facilities. All of these efficiencies mean cost savings and improved supply chain performance.


If youre willing to demonstrate the necessary flexibility, cross-docking can deliver big rewards. This requires you to take on the challenge of analyzing your operation to find ways to better utilize your docks and warehouse space and to follow through with the necessary adjustments to use your facility more effectively. Using your warehouse in a new way by cross-docking also gives you a chance to see your facility and your business in new and more effective and productive ways.


Ron Cain and Damian Burke co-authored Will Cross-Docking Cut Costs and Increase the Efficiency of Your Supply Chain? Ron Cain is the President of TMSi Logistics, with locations in New Hampshire and Florida. He can be reached at 603-373-7233 or at ronc@tmsilog.com. Damian Burke is the Director of Client Solutions and can be reached at 770-270-0300 or via e-mail at damianb@tmsilog.com.