Blog Posts Could Cross-Docking Help Your Supply Chain?

Whether they’re consolidating LTL into truckload to reduce the number of deliveries to retail outlets or breaking larger loads into individual orders for home delivery, more and more companies are finding value in cross-docking today.

There has been a recent resurgence of interest in the practice of receiving product and shipping it out without putting it into storage. Cross-docks are typically used for “hub-and-spoke” arrangements, consolidation, or deconsolidation.

Saddle Creek’s new report explores the advantages of cross-docking in today’s marketplace, identifies important factors to consider before adopting the practice, and examines when it makes sense to outsource.

Following is an excerpt from the Ultimate Cross-Docking Guide

Why Cross-Dock?

Companies find that cross-docking gives them an opportunity to take costs out of their supply chains and gain transportation efficiencies, so they can better serve their customers.

Enhanced Service

“Most companies consider cross-docking to improve customer service,” says Tom Patterson, a senior vice president at Saddle Creek Logistics Services with more than 30 years of cross-docking experience.

Cross-docking allows products to reach their end destination more quickly and economically, ensuring that products are available when needed and reducing supply chain costs. This is particularly important for omnichannel operations challenged to meet increasing demand for same-day or next-day deliveries.

Recently, Patterson observes, there has been expanded use of cross-docking to support a direct-to-consumer business model – specifically for home delivery. The practice allows omnichannel companies to have a smaller representative inventory of products that can be quickly deployed to meet customer demand.

Cross-docking can also be used to get the right mix of products to the customer. Some operations break apart pallets into individual orders—layer picking or even case picking to get stores what they need. Store-ready orders can be prepared by suppliers for shipment to the cross-dock, then routed for delivery utilizing the most cost-effective mode of transportation.

Cost Savings

Cross-docking offers opportunities for cost control in several areas, most notably warehouse space, labor and transportation.

Warehouse space.  Since inventory is not stored in a warehouse, companies can avoid the major brick-and-mortar investment of a huge warehouse and reduce their inventory carrying cost.

Cross-docking does require a somewhat larger footprint in an omnichannel environment where order sizes are much smaller and short-term storage may be needed. “Direct-to-consumer orders for appliances, for example, require more concrete. They’re moving in one’s and two’s, so it might take three to five days to accumulate enough for a truckload,” Patterson explains. “The practice still delivers significant cost-saving efficiencies, however.”

Transportation.  The biggest opportunities for cross-dock savings are transportation related, Patterson says. Considerable freight savings can be achieved by consolidating LTL shipments into full loads. Cross-docking also enables companies to ship full truckloads of products close to the customer, reducing the distance (and cost) of final-mile deliveries. Taking advantage of transportation efficiencies also allows companies to mitigate the impact of rising fuel costs.

Labor.  Because cross-docked products are not put into storage, less handling is required. Companies save on labor costs when they accumulate freight coming in, mix and match it, and put it on trucks.

When used strategically, cross-docking can play an integral role in today’s supply chain. To learn more, download the guide.