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Cross Docking: What Is It & What Are the Benefits?

Depending on who you ask, you may get different explanations of what is cross-docking. That’s because cross-docking can help improve many different parts of the supply chain, including warehousing, manufacturing and transportation.

However, regardless of who you ask, there’s one step in the supply chain that will not be part of their answer: “put products into storage”.

What is Cross Docking?

Cross-docking is a technique that keeps products moving through your supply chain, with little or no need for storage along the way.

How a typical cross-docking process works:

  1. Products are unloaded from trucks or rails cars.
  2. They are sorted, consolidated, combined and/or prepared for subsequent shipping.
  3. They are loaded onto trucks or rail cars for shipment to their next destination.

Different Cross Docking Applications

To get a better understanding of cross-docking and its benefits, it helps to learn more about how to use it.

Manufacturing Cross-Docking

In this procedure, a warehouse may receive products and prepare sub-assemblies before sending them to production.

Distributor Cross-Docking

This process combines products from a variety of vendors onto a mixed pallet for shipment to the customer. For example, computer parts distributors can receive parts from various vendors and combine them into a single shipment.

Transportation Cross-Docking

This procedure consolidates shipments from different carriers in the less-than-truckload (LTL) and small-package sectors to lower costs.

Retail Cross-Docking

After receiving products from different vendors, they are sorted and shipped to different retail stores according to purchase orders.

Opportunistic Cross-Docking

Products move directly from the receiving dock to the shipping dock to fulfill customer sales orders.

The Benefits of Cross Docking

There’s a reason that the first thing we told you about cross-docking is that it involves little or no storage. It’s at the core of a long list of benefits that cross-docking can deliver. With less need for storage comes less need for warehouse space and the costs that go with it. And reducing your operating costs is the basis of every benefit you get from cross-docking.

  1. Less Materials Handling

    You can find cost savings here too. Less need for storage means less need for putting products into storage, tracking them while they are there, and taking them back out of storage.

  2. Fewer Damaged Goods – Fewer Returns

    Inventory can be checked during unloading for damage from transportation. The result is fewer damaged goods getting to your customer and fewer returns from your customer. Also, with fewer materials handling, there’s even less chance of damaging your inventory.

  3. Faster Delivery Times

    Cross-docking facilities are typically near-final destinations, which reduces excess transportation. This, along with the time savings of avoiding the storage step, greatly improves delivery times.

  4. Lower Transportation Costs

    Shipment consolidation and route optimization reduce unnecessary mileage. And they lower fuel bills and vehicle maintenance costs too.

  5. Free-Up Shipping Containers

    With cross-docking facilities near shipping ports like Vancouver, you can help get more containers back to your suppliers by cross-docking shipments as soon as they arrive. That helps you reduce the costs of delays in your supply chain.

  6. Higher Customer Retention

    There are ongoing disruptions in supply chains due to pandemic-related delays. That means customers are scrambling to find ways – anyway – to receive shipments. When you combine all the benefits of cross-docking, you can offer faster delivery times, fewer damaged goods and lower costs.

    And you enjoy higher customer retention by avoiding the costs of finding new ones.

Best Types of Products for Cross-Docking

Cross-docking works better with certain products.

  • Perishable goods
  • Products that don’t require inspections on receipt
  • Pre-tagged (barcodes, RFID), pre-ticketed, and ready-for-sale products
  • Promotional items and new products
  • Standard retail products – those with consistent demand
  • Pre-packaged orders from other plants or warehouses

The Importance of Inventory Management Systems for Cross Docking

While there are many undeniable benefits of cross-docking, there’s one risk you can avoid if you are ready for it. During cross-docking, products may not be handled in the company’s standard way. If a robust inventory management system is not in place, there’s an increased risk of lost inventory. However, with the right system and employee training, you can minimize the risk.

Cross Docking with PiVAL

Regardless of the benefits, implementing new processes involves a learning curve. But the cross-docking and supply chain logistics specialists at PiVAL can help you eliminate the curve. From helping you identify the best ways to use cross-docking, to ensuring smooth implementation, we have the facilities and people ready to make it happen.

If you need cross-docking support in other major hubs apart from Vancouver, know that our facilities in Montreal & Toronto can help given their proximity to the railyards.

To learn more about managing your inventory, check out our article “Your Primer on Inventory Management Systems“.

What challenges are you currently facing that are disrupting your supply chain, ultimately impacting how you service your customers? My team and I are ready to help you optimize your supply chain. Contact me today to discuss how we can support your growth.

Jon Chiniborch

Vice-President Sales & Marketing

jon@pival.com 1-888-557-4825