How Does Cross-Docking Compare to Traditional Warehousing
First it was 5-7 business days, then 2 day shipping with Amazon Prime became the norm, and now we’re up to same-day shipping in some larger US cities. As the e-commerce industry continues to grow, the supporting logistics infrastructure has had to adapt with the rapid pace of customer expectations on shipping times.
One way that warehouses are increasing efficiency and cutting down on shipping time is through the use of a strategy called cross-docking.
What is Cross-Docking
Cross-docking in its most basic definition is shipping out products or goods as soon as you receive them, skipping the warehousing process. Going right from the truck that delivered everything to your loading dock and back onto a truck to ship directly to customers without needing to actually store products.
This is a great way to increase logistical efficiency and save on storage costs, but is certainly not an alternative to warehousing as a whole. It’s best to think of cross-docking as a way to enhance your traditional warehousing instead of replacing it.
Key Differences of Cross-Docking from Traditional Warehousing
Shipping out a product as soon as it comes in or breaking down one large incoming shipment into multiple outgoing shipments by region has the benefit of greatly increasing shipping time.
Shipping and Storage Costs:
Being able to move product directly from an incoming truck to an outgoing truck going to customers means that you’re only paying for shipping costs, not storage plus shipping.
Shipping out as much product as soon as it comes in will help minimize space needed for inventory storage.
Avoid unnecessary damage of products by getting them loaded onto a truck and their way to customers as soon as possible.
Is Cross-Docking Right for your Business Logistics?
Cross-docking may not be a suitable solution for every business’s warehouse needs. Therefore it is very important to have a full understanding of the process and how it will impact your specific supply chain.
For example, Industries such as produce that need to be received, processed, and shipped as soon as possible will certainly benefit from implementing cross-docking strategies. Whereas products that may need to be re-branded on arrival, repackaged, or packaged with additional products wouldn’t make sense.
Another thing to consider is how you track inventory and order tracking as a business. Sure, you may be able to increase shipping time but it can become difficult to manage your orders or inventory without a robust tracking system in place.
Primary Reasons for Implementing Cross-Docking:
- Creating a central distribution site for sorting products to be delivered to different regions of the country. Sometimes referred to as the “hub and spoke” model.
- Being able to combine multiple smaller shipments into one transport method as a means of consolidating shipments.
- Conversely, breaking down large shipments into smaller ones in order to streamline the delivery process to the customer.
Most businesses dealing with a supply chain will be able to utilize cross-docking as a way to increase warehousing efficiency not replace it entirely. The key differences stated above are still relevant to the benefits of cross docking but it probably isn’t a catch all for your entire supply chain.
That’s where a hybrid model comes in combining cross docking and traditional warehousing to help your business achieve maximum logistical efficiency.
If your business can utilize cross-docking strategies it will almost certainly increase the efficiency of all other warehousing being done by the business.