Blog Posts 6 Factors for Optimal Cross-Dock Performance
In today’s marketplace, speed and agility can be a distinct competitive advantage. Companies are always on the lookout for ways to get products to their end destination more quickly and economically. Cross-docking has seen a resurgence of interest in recent years – for just this reason. Many companies find that the practice of receiving product and shipping it out without putting it into storage helps them to take costs out of their supply chains, gain transportation efficiencies and better serve their customers.
A new report published by Saddle Creek explores current cross-docking trends and best practices for establishing cross-dock operations. Following is an excerpt from the Ultimate Cross-Docking Guide.
Considerations for Effective Cross-Docking
Potential practitioners should consider the following factors before adopting the practice.
In order to reap the full benefits of cross-docking, companies should consider utilizing facilities designed specifically for the practice. A cross-dock facility typically has truck or dock doors on two or more sides with little or no storage space and is designed to accommodate factors such as product movement requirements, dock-area layout and capacity, yard management and material handling equipment.
With the current shortage of industrial real estate in key markets, however, it can be difficult for companies to find space to build new cross-dock facilities.
Many companies add a cross-dock facility to an existing DC, says Tom Patterson, a senior vice president at Saddle Creek Logistics Services with more than 30 years of cross-docking experience. “Trying to cross dock within a traditional DC can be disruptive, but it’s helpful to have the function in a separate building on the campus because there’s more flexibility for labor and transportation,” he explains.
When designing cross-docks for direct-to-consumer operations, Patterson advises companies to anticipate the increasing Uberization of freight by creating more vendor-friendly facilities. For example, home delivery operations might involve product pick-up via cars or vans instead of delivery trucks, and the cross-dock facility design should take that into consideration.
“Just about any type of product can be cross-docked, but the practice is particularly effective for companies that are moving heavy volume on any given day and need to do it in a precise way where service is critical,” Patterson says.
Durable goods are the most common products for cross-docking. Products that are not easily sent via parcel carrier (appliances, furniture, toys, etc.) can be especially good candidates.
More sensitive products are also cross-docked regularly. Food and beverage products with a short shelf life (i.e. baked goods, snack foods, beer) are good examples. The system works well for perishable products that need to be delivered within 24 to 48 hours to preserve quality and freshness.
High-value/high-security goods such as electronics or pharmaceuticals also have good potential. The high turn rates and reduced handling associated with cross-docking minimize the risk of loss due to theft and reduce opportunities for damage. Cross-docking also helps companies to avoid added carrying costs for their high-value inventory.
With the fast pace of a cross-dock environment and its demands for an efficient and responsive flow of information, strong systems support is critical.
“Cross-docks require a disciplined process as they are driven by exact scheduling, product tracking and trailer placement/yard management,” Patterson explains. “A good planning mechanism and impeccable scheduling are vital. It is important to know how much product customers will require, how many associates are needed for a given shift, or how many trucks will be required, for example. Business processes and IT support go hand in hand.”
4. Shipping Practices
Historically, a limited number of SKUs and full truckload shipments have been a solid recipe for success with traditional cross-docks. This is most effective when the product turns consistently to avoid a backlog at the final destination.
While products that are typically full-pallet-in, full-pallet-out are most easily cross-docked, less-than pallet quantities and individual orders also can be cross-docked although they are more labor intensive.
“Companies that are shipping multiple items to multiple locations consistently are prime candidates for cross-docking,” Patterson says. “Some store chains bring them into one location and split them up for multiple locations, combining multiple product types to reduce the number of deliveries to their retail outlets. A similar process works well for omnichannel orders.”
Strong cross-docks require reliable transportation programs, Patterson notes. “Companies that lack experience in transportation management can suffer in a market already tight on capacity. Predictability and timeliness are critical since there is not stock inventory to pull against,” he says.
5. Product Touches
The number of “touches” products receive during the cross-dock process can vary significantly, depending on the objectives for the operation. While some companies receive and load outbound product without placing it on the warehouse dock, a “two-touch” approach is more typical. In this scenario, products are received and staged on the dock then loaded outbound without being put into storage. Still other operations are “multiple touch”— where product is received and staged on the dock then reconfigured for shipment and loaded outbound directly from the warehouse dock.
“Obviously, greater efficiency can be achieved the less the product is handled,” Patterson says. “It really comes down to how much freight you want to put through and how long you want it to dwell.”
6. Distance to Destination
The distance from the cross-dock to the customer can vary greatly. For some companies, it is important to have a cross-dock operation in a centralized location. For others, a typical shipment travels less than 100 miles once it has been cross-docked.
Companies with omnichannel cross-docks tend to situate facilities in very close proximity to the consumer in order to dramatically shorten the distance required for home deliveries and save on freight costs.
“Cross-docking is not a one-size-fits-all solution,” says Patterson. “You need to customize the solution to meet the needs of your business—and your customer’s business.”
To learn more, download the Ultimate Cross-Docking Guide.