Is Cross Docking Right for Your Business?

Is Cross Docking Right for Your Business?

If you have been spending lots of money on storing your goods in a warehouse, consider using cross docking services. When you partner with a cross dock facility, you can eliminate the costs of storing your inventory and achieve faster inventory turnover.

How Cross Docking Works

When your goods get into a cross dock facility, the staff there will unload your truck as they sort or repackage the goods to prepare them for delivery to the final destination. They will then load them onto an outgoing truck.

At times, you may want your goods to stay in a cross docking warehouse for a few days as they await the due date for delivery. The warehouse can also organize to store your goods for such short periods until the appointed delivery time.

A cross docking distribution strategy helps you to avoid locking money in stored inventory.

Cross Docking vs Warehousing: The Difference

A while back, warehouses were the epitome of an efficient supply chain. Businesses used them to store excess goods to meet demand. Despite the necessity of these storage spaces, warehousing meant more costs for businesses. These included costs of storage which encompassed taxes, labor, and storage space.

Although today’s warehousing is not yet dead, it is much more efficient today thanks to technological advancements. Businesses no longer have to store large quantities of goods.

In cross docking, warehouses use a Warehouse Management Software (WMS) to:

  • Get real-time data on inbound and outbound goods
  • Reduce the cons of manual entry of goods through  employing barcode scanning
  • Track inventory within the cross docking warehouse
  • Track and report task management for smoother operations

The Advantages of Cross Docking

Apart from reducing the cost of storing and managing inventory, warehousing also helps to:

  • Reduce material handling and the associated damage
  • Increase product quality as stock undergo quality checks while in the cross docking warehouse
  • Give your customers better services through timely delivery, decreased damage to products, and lower cost of goods
  • Eliminate fixed costs of investing in warehousing equipment

Challenges of Cross Docking

While cross docking smooths your supply chain, its implementation can be quite challenging. Some of the challenges are:

  • Working with your supplies to ensure that they deliver raw materials for production in time
  • Cross docking can also result in damage of materials if there are no proper procedures in place
  • If you choose not to outsource cross docking, you will need a huge initial investment in cross docking equipment

Which Businesses are Suited for Cross Docking?

Cross docking may not work for all businesses. Below are some businesses that can benefit from using a cross docking strategy:

  • Food and beverage industry

If you are part of the food and beverage industry supply chain, cross docking services are essential. This is because customers such as restaurants and food manufacturing companies need a constant supply of raw materials to get their businesses running. Delivering foodstuff also requires you to meet tight deadlines to avoid expiry.

Instead of investing in expensive temperature-controlled equipment, a just-in-time (JIT) mode of supply would work best to move food items across the supply chain while they are still fresh.

  • Chemical products

Storing chemical products is not only expensive because of the special conditions required; it can also be very risky. Inflammable materials, for example, when they blow up can cause damage to your entire production plant.

Producing as per demand and the least stock necessary can save you lots of money in storage costs and ensure that you keep your premises safe.

  • Pharmaceutical products

The medical industry could also use cross docking services. Most medicines come with an expiration date. To increase the shelf life of drugs, prompt delivery to a ready market is required. Pharmaceutical companies also need to manufacture drugs as per their demand to reduce the losses caused by the expiration of low-shelf life medicines.

  • E-commerce firms

If you run an ecommerce business dealing with consumer goods, you need a fast delivery system. Amazon’s leadership in the ecommerce business is thanks to its swift delivery system. Customers love fast shipping especially if it is free or cheap.

Cross docking can help you provide same or next day deliveries which increases customer satisfaction and fosters business growth.

  • High demand or urgent goods

Cross docking also works great for goods that are on high demand. These include staple foods and promotional materials. In particular seasons when goods are on high demand, you can also employ cross docking.

  • Automotive industry

A market leader such as Toyota is known for its JIT supply chain. Their lean model has helped them reduce costs and operate profitably.

Final Words

Would your business use less warehousing and save costs? Then cross docking would be an excellent strategy to use. Cross docking is especially effective if you are shipping a large number of goods because you can consolidate them and transport them via the cheapest route.

A cross docking facility such as XoLogistics can help you handle your cross docking needs so that you can run a competent supply chain and enjoy cost savings.

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