What is Cross Docking and Its Benefits?

The efficiency of the supply chain has a measurable impact on an organization’s growth. One of the important strategies that can be implemented by businesses to stay ahead of their competition is cross docking. When cross docking is implemented at the right time, it can improve the handling time of the shipments. 

What exactly is cross docking?

Cross docking is the process where the goods from a supplier or manufacturer are directly shipped to the customer without any storage or handling time. This often takes place at a docking terminal where the products are received from the inbound dock and are immediately transferred to the outbound dock for transportation. 

In simpler terms, the inbound goods arrive at the docking terminal via trucks or trailers and then these goods are right away allocated to a receiving dock. The products are then unloaded and  sorted. Once the products get sorted, they are moved to a different dock with the use of a pallet truck or a forklift. When the goods reach the outbound dock, they are then loaded onto the outbound transportation for delivery. 

Cross docking can come in really handy for saving time and money and is a must-have in logistics. A quicker service can help customers differentiate the best service provider. 

Benefits of Cross Docking

Reduces the footprint of the facility

With the use of cross docking, businesses can easily reduce the overall square footage which is required in a facility. As the process requires very little or no storage at all, businesses need less space. This, in turn, reduces the costs associated with inventory storage.

Less Material Handling

Businesses can see visible reductions in material handling costs as well. When businesses opt for cross docking, the material handling process gets limited to just the loading and unloading of goods, with very minimal picking or staging activities. 

Improve product quality

Cross docking also helps with improving product quality. When the products are unloaded and are staged, the staff can manually inspect the goods for any damage. This reduces the overall amount of damaged products that are delivered to the customers, and in turn helps to increase customer satisfaction.

Savings on labour costs

As the material costs are reduced greatly, this directly impacts the labour costs. As the labour costs are reduced, the savings can be passed on to the customers. This way, cross docking can help a business gain a competitive advantage via cost.

Less Damage

As cross docking involves minimal handling, the products remain free from damage. This again reduces any costs that involved in damaged inventory.

Reduced Delivery Times

Cross docking also helps with the reduction of overall delivery time. The companies that offer cross docking services are usually located near the final delivery destination. Due to this, there is no excess travel and the final deliveries are made as soon as possible. This in turn not only increases customer satisfaction and loyalty, but businesses can use cross docking to capture new markets with quicker and prompt deliveries. 

Reduced Transportation Costs

Cross docking also helps reduce transportation costs. As the routes are well-optimized, traveling involves fewer miles, and this reduces vehicle servicing and fuel costs. 

The benefits mentioned above prove that businesses can implement cross docking, not only to save money, but to create new opportunities and retain existing customers with enhanced customer satisfaction. 

When can cross docking be used?

Cross docking might not be suitable for every business or warehouse. It is important to consider both the pros and cons of the process before making a decision. Businesses or warehouses need to analyze if cross docking can help improve the quality of the products, reduce costs and increase customer satisfaction. 

Cross docking can be very beneficial for businesses that deal with temperature-controlled products like fresh produce, dairy and frozen products. As these products need to be delivered as quickly as possible, the transit time can be reduced by using cross docking. 

Also, products that are packed and need to reach the retail destination or the customer quickly can be delivered faster when cross docking is implemented. Some of the major reasons why businesses or warehouses implement cross-docking are mentioned below: 

– Cross docking acts as the central hub for products that need to be sorted and then sent for delivery to different locations. This is known to be the most productive, fastest method and is also termed as the “hub and spoke” process. 

– Warehouses use cross docking to save on transportation costs. Smaller inventories are loaded onto one truck for cost management. In simple terms consolidated arrangements are made to enable a faster yet cost-effective mode of transportation. 

– Cross docking comes is beneficial when larger inventory needs to be broken down into smaller loads for customer deliveries. 

Conclusion

Through understanding the process and types of cross-docking, a business can make an informed decision about using it. Make sure to get in touch with your warehouse manager for any questions you might have.