Cross-docking

Cross-docking is a practice in the logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change the type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same destination or similar destinations.

Cross-dock operations were first pioneered in the US trucking industry in the 1930s, and have been in continuous use in less-than-truckload (LTL) operations ever since. The US military began using cross-docking operations in the 1950s. Wal-Mart began using cross-docking in the retail sector in the late 1980s.

In the LTL trucking industry, cross-docking is done by moving cargo from one transport vehicle directly onto another, with minimal or no warehousing. In retail practice, cross-docking operations may utilize staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship.

Advantages of retail cross-docking

• Streamlines the supply chain, from point of origin to point of sale
• Reduces labor costs through less inventory handling
• Reduces inventory holding costs by reducing storage times and potentially eliminating the need to retain safety stock
• Products reach the distributor, and consequently the customer, faster
• Reduces or eliminates warehousing costs
• May increase available retail sales space
• Less risk of inventory handling

Disadvantages of cross-docking

• Potential partners may not have the necessary storage capacities
• An adequate transport fleet is needed to operate
• A computerized logistics system is needed
• Additional freight handling can lead to product damage
• labour costs are also incurred because the moving and shipping of stock happens

Typical applications

• "Hub and spoke" arrangements, where materials are brought in to one central location and then sorted for delivery to a variety of destinations
• Consolidation arrangements, where a variety of smaller shipments are combined into one larger shipment for economy of transport
• Deconsolidation arrangements, where large shipments (e.g., railcar lots) are broken down into smaller lots for ease of delivery

Retail cross-dock example: using cross-docking, Wal-Mart was able to effectively leverage its logistical volume into a core strategic competency.

• Wal-Mart operates an extensive satellite network of distribution centers serviced by company-owned trucks
• Wal-Mart's satellite network sends point-of-sale (POS) data directly to 4,000 vendors.
• Each register is directly connected to a satellite system sending sales information to Wal-Mart’s headquarters and distribution centers.

Factors influencing the use of retail cross-docks

• Cross-docking depends on continuous communication between suppliers, distribution centers, and all points of sale
• Customer and supplier geography, particularly when a single corporate customer has many multiple branches or using points
• Freight costs for the commodities being transported
• Cost of inventory in transit
• Complexity of loads
• Handling methods
• Logistics software integration between supplier(s), vendor, and shipper
• Tracking of inventory in transit

Cross-dock facility design

Cross-dock facilities are generally designed in an "I" configuration, which is an elongated rectangle. The goal in using this shape is to maximize the number of inbound and outbound doors that can be added to the facility while keeping the floor area inside the facility to a minimum. Bartholdi and Gue (2004) demonstrated that this shape is ideal for facilities with 150 doors or less. For facilities with 150–200 doors, a "T" shape is more cost effective. Finally, for facilities with 200 or more doors, the cost-minimizing shape is an "X".^[1]

References

1. Bartholdi, John J.; Gue, Kevin R. (May 2004). "The Best Shape for a Crossdock". Transportation Science 38 (2): 235–244. doi:10.1287/trsc.1030.0077.

Making the Move to Crossdocking, Maida Napolitano and the staff of Gross & Associates, 2000 copyright, www.werc.org