What is Cross Docking in Warehouse and how it is Useful?

What is Cross Docking in Warehouse and how it is Useful?

Nowadays, many businesses are relying upon cross-docking to ensure that their perishable produce reaches the consumers before it gets stale.

Docking in warehouse is a profitable procedure because it does not involve much storage time as the products from the supplier are directly distributed amongst retailers and wholesalers.

By definition, cross-docking in the warehouse seems pretty convenient. However, there are many factors which make this process difficult, such as the distance between warehouse and retailers, and ultimately the customers. To overcome this hurdle, most docking services own warehousing facilities in close proximity to the markets and populated areas to ensure quick delivery to retailers and sales.

However, the customers and retailers who are established outside the city limits are not able to avail the products. For them, cross-docking warehouses are created in remote regions so that travel time and handling is reduced to a minimum.

How Does Cross-Docking Work?

Typically, a manufacturer hires a third party logistics to store their products in the warehouse before they are shipped to retailers of customers via aeroplanes, ships, trucks, or any other mode. On the contrary, cross-docking involves unloading of products from the trucks when they arrive in the warehouse, repackaging them, and loading them back into another mode of supply wasting no time. These new transports take the products directly to retailers.

Although some products are sometimes kept in the warehouse, the primary goal of cross-docking is to minimize storage and handling time.

Benefits of Cross Docking

Cross-docking in warehouse is usually used by businesses involved in e-commerce. Here are some benefits of cross-docking.

1. Cost-Effectiveness

One of the most evident advantages of cross-docking is reduced requirement of time, money, and space for storage as fewer hours are spent in the warehouse as compared to warehousing. Also, since the packaging and picking are done simultaneously, the labor costs are considerably less.

2. Increased Efficiency

Faster and more reliable delivery is what pleases the customers today, and cross-docking helps the businesses to achieve just that. Since fresh products reach customers, they become more loyal to the brand, allowing manufacturer ample of scope to expand.

Moreover, the loading process is simplified, allowing the workers to work more efficiently within their shifts.

3. Reduced Inventory Management

Since most products are repackaged and sent to the retailers as soon as they arrive at the warehouses, there is little requirement for inventory management. Now that the staff is free from handling inventories, they can focus on more key tasks such as market research and product development. This will help the businesses expand and start supplying to the untapped market potential as well.

Products that require Cross Docking Services

Some materials can be conveniently stored in the warehouses, while others are more suited for cross-docking, such as:

  • Perishable items such as fruits and vegetables that require to be shipped immediately.
  • High-quality products such as spices that are not supposed to go through quality checks and inspections.
  • Products which come to the warehouses with bar codes and other tags are ready to be sold and do not require warehousing.
  • Promotional samples and brochures which are not supposed to be tagged or ticketed.
  • Retail products that are a staple in the market and are in constant demand, that is, the products with low demand elasticity.
  • Pre-packaged orders from other warehouses, ordered by customers online.

Types of Cross Docking

Now that you know how cross-docking works and the products that can use these services, here are a few scenarios according to which cross-docking doffers.

  • Manufacturing Cross Docking

When the warehouse receives the raw material or parts which are further required by manufacturing, the cross-docking is manufacturing based. The warehouses are expected to prepare sub-assemblies for processing.

  • Cross-docking for Distribution

This type of cross-docking services helps when customers order products that are formed by combining various elements. These elements are to be procured from different manufacturers. For instance, a computer requires a monitor, mouse, CPU, keyboard, graphic card, speakers, and other hardware. The warehouse only ships the entire consignment once the final product has been received.

  • Transportation Cross Docking

Such cross-docking works when products from different vendors are headed to the same location, but no order is big enough for a truckload. Therefore, all vendors hire one transport to gain from economies of scale.

  • Opportunistic Cross Docking

This is done to meet customer orders by transferring the products from the receiving dock to the outbound shipping dock directly.

  • Retail-based Cross Docking

It involves receiving the products from different vendors in the same warehouse and sorting them to be shipped to different locations to reduce handling expenses.

In the end, cross-docking is an incredible addition to the logistics services if you want to reduce costs, transport perishable goods, increase efficiency, and save valuable time on inventory management.

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