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The space that goods take up in a warehouse and the duration they remain there before being dispatched are two cost factors for companies to consider. Cross-docking is an optimised goods management method that applies the principles of speed, safety and economy to avoid unnecessary time and money expenditures.
What is Cross-Docking?
The aim of cross-docking is to minimise handling of individual goods more than necessary. Ideally, goods should be managed directly, eliminating the need for storage. In other words, goods should flow from the factory or distributor to transportation, on the same day, bypassing storage racks. This method reduces logistics activities, saving effort, time and lowering error risks during the process.
However, achieving zero storage is unattainable. We will always require some stock to handle peak orders and unforeseen events.
So, what’s the ideal cross-docking percentage in a warehouse’s total movements? In general, we recommend 40%. Today, most companies apply this system, occasionally, for urgent orders. The challenge is to systematise this methodology in daily operations.
Main Conditions and Keys to Cross-Docking
Effective Cross-Docking planning requires:
- Understanding the behaviour and predictability of demand.
- Having 100% reliable suppliers and transport partners.
- Utilising software that allows for the coordination of operations among all parties, including automated handling, traceability, data management systems, etc.
- Preparing facilities to work with this method: loading and unloading bays, docks, consolidation areas, etc.
- Establishing a work protocol for cross-docking involving all parties in the process.
- Training logistics, administrative and commercial staff.
How Cross-Docking Works in Wholesalers
In the wholesale distribution sector, goods often arrive on pallets or in containers, and it is a challenge to manage receiving, unloading, checking, routing, etc. The application of a cross-docking system is a real competitive advantage here, eliminating intermediate steps and optimising storage.
This requires good coordination with both suppliers and customers: anticipating the date and time of goods arrival, preparing unloading areas, establishing coordinated purchasing policies, and scheduling transport and shipment in advance.
How Cross-Docking Works for Manufacturers
The objective here is to consolidate and send the largest possible volume of goods to the customers on the same day they leave production, bypassing warehouse storage. This means creating a direct flow between production and transport.
If feasible, a pull production system, driven by demand, is advisable. This reduces inventory and facilitates more flexible product management.
How Cross-Docking Works in E-commerce
In e-commerce, speed is key to business success. For this reason, cross-docking is commonly used here.
Often, some of the goods that arrive in a shipment from the supplier have been pre-sold online. For this reason, e-commerce shops typically categorise each incoming item into three groups: stock for service assurance, items labelled and sent directly to customers and good moved to the order preparation area.
In summary, cross-docking is undoubtedly an advantageous method that facilitates goods management, cuts storage costs and benefits customers.
Source:
Avda. De Italia nº2 – CTC