There has been steady pressure to reduce supply chain costs throughout the world, even with rising customer expectations and increased load amounts. This is because of the fierce competition that is present in supply chain management. Streamlining logistics and maximizing the effectiveness of the supply chain have become essential to maintaining deadlines. Cross-docking is a system in which inventory arriving from inbound vehicles is immediately transferred to outbound vehicles for further movement.
Learn what cross-docking is and find out whether you should be using it.
The need for it is dependent on the type of business and their existing supply chain management gameplan.
What It Is
It is a logistics technique used to transfer the incoming merchandise from the suppliers to outgoing vehicles with very little storage facility space, or sometimes even none in between. By using this method, firms can receive goods from multiple manufacturers, reorganize bulk products into smaller, more efficient ones, and then send them on for further transport.
Many firms employ this management strategy because of its multiple advantages:
- Quicker Delivery: It reduces the amount of time that stock is kept in the warehouse by accelerating the delivery of goods.
- Lowered Storage Costs for Inventory: It can lower the number of warehouses required sometimes to zero as goods are no longer being held or stored but are only passed on.
- Lowered Labor Expenses: As a result of not storing products, there is less labor required as the product never enters inventory and thus does not need to be tracked.
With a clear sign leading towards adopting cross-docking in your supply chain management strategy, let us see who would benefit from doing the same.
Who Is Using It?
There are a wide variety of businesses that receive and transfer goods daily. But not all of them would have the need to use this method. The ones that use it are:
- Manufacturers and Distributors: They can take components, raw goods, and other subassemblies and collate them using cross-docking before transferring them to production plants as per the requirements.
- Perishable Items and FMCGs: Firms dealing in items that have a low shelf life or have a tight delivery schedule can use it to improve efficiency and speed up the process by removing the need for and cost of inventory. Many supermarkets and other large department stores use cross-docking daily.
- Firms with High Demand Items: Goods that have shown high demand regularly can be stored by using cross-docking to maintain a steady supply to match customer needs. This also removes the requirement for excess stock, thus reducing costs.
In conclusion, cross-docking is a useful goods management technique that can be handy to many firms. It presents the right advantages to manage the rising competitiveness of the industry. The key is to figure out whether your industry requires its use or not.
