If speed and productivity are the primary measures of success for your supply chain, then cross-docking is the ultimate supply chain strategy for your business. When implemented correctly under the right conditions, cross-docking can give your business a competitive edge as many factors come together to decrease your bottom line and deliver results quickly. Here’s how:
What is Cross-Docking?
Put simply, cross-docking removes the storage portion of a supply chain by transferring incoming product directly to their outgoing distribution channels. This means timing out the arrival of freight for the same time as the distribution of it, thereby eliminating time spent in the warehouse. Sophisticated demand forecasting tools and just in time manufacturing practices come together to make this shortcut possible, and there are many advantages for most businesses.
Using cross-docking in your supply chain considerably reduces the time it takes for a product to leave the manufacturer and arrive in the customer’s hands. By cutting out the need to stock your warehouse first and then pull from the existing wares, you’re also eliminating labor hours needed to maintain shelves and transitioning products directly to their next destination. For made-to-order services, this means a quicker turnaround for customers and a shorter lead time on profits for your business.
In addition to the time spent in labor managing a warehouse facility, you’re also saving the price of storage. Not only does your stock take up space in a building that it’s priced to maintain, it’s possible your warehousing costs are subsidizing technologies used in the warehouse that your business may not need such as climate control, stock-level sensors, AI automations, or a myriad of other possibilities. But with cross-docking, you’re cutting out unnecessary down time and unneeded services.
Anytime you’re reducing costs and time from your supply chain, you’re increasing its efficiency as well. The quick turnaround of goods from production to consumption required in cross-docking strategies help increase throughput for your business and reduce the time handling freight. It also allows for your distribution hubs where handoffs from one truck to the next happen in line with the final destination rather than diverting it to your warehouse first, which can impact time and fuel savings.
The longer the time spent on a shelf, the more susceptible your product is to unexpected risk factors. Long lead times to distribution mean more exposure to the elements as well as handling by team members. Reducing these factors also means reducing the risk of expiration, damage, human error and shrinkage. Over time, these are mistakes that are bound to happen in a traditional supply chain. The cost of each can add up, but their reduced risk with cross-docking can add up to savings for your business.
Cross-docking is a delicate strategy that increases supply chain efficiency when implemented properly. It is not the right choice for every business, but when it is cross-docking can light fire to what you thought was possible to achieve in the same timeline. Talk with your supply chain strategy team about cross-docking to take the first step toward creating new opportunities for your business.