What does cross dock mean in logistics

Handling of goodsHow does cross docking work?

Flexibility and constant cost pressure are constant issues when it comes to increasing the competitiveness and performance of a company. Storage costs are a major cost driver for manufacturing companies. Above all, this includes the costs of providing the necessary storage capacity and the costs of handling the processes in a warehouse, such as storage and retrieval or order picking.

One way of reducing storage costs and throughput times is cross docking. The aim of this inventory-free distribution process is no longer to store goods, but to transship them directly and send them to customers.

Cross docking

Cross docking is a type of goods handling in which the goods are not stored. The goods are already pre-picked by the supplier or sender. Delivered articles are not stored, but assigned directly to the corresponding goods issues and sent on.

Benefits of cross docking:

  • Shorter lead times
  • Timely delivery
  • Reduction of the inventory
  • Minimization of storage space requirements
  • Avoidance of storage and retrieval processes
  • Reduction of storage costs

Variants of cross docking

Cross docking skips the process steps “collection and storage”, “warehousing” and “retrieval and picking”. A distinction is made between three variants.

Single-stage cross docking (variant 1)

The goods are already picked and packed and delivered by the supplier, thus forming a logistical unit. In this form, the goods are then forwarded to the recipient unchanged. The goods are sent to a shipping order in the shipping area without any changes.

Two-stage cross docking (variant 2)

The goods are forwarded unchanged to the transhipment point. There it is then re-picked into new units and sent to the different recipients.

Multi-level cross docking (variant 3)

The goods are not only re-sorted at the transshipment point, but other activities also take place, such as labeling or packaging.

Example: Procedure for cross docking

A simple example illustrates the cross-docking process. A company sells products that are manufactured through its own production as well as purchased (commodities). With classic warehouse logistics, in addition to products from our own production, the range of merchandise is also stored. Customer orders are picked from the warehouse, packed in the dispatch area and made ready for dispatch. With cross docking, only the goods from our own production are stored and picked. The merchandise would be delivered by the supplier in good time for the dispatch date and “married” to the customer order in the dispatch area.

The flow of information must work smoothly

When it comes to cross docking, the most important thing is a smooth process along the entire value chain. The individual process steps in the supply chain must be transparent and interlinked. The flow of information between all parties involved - for example the manufacturer, the supplier, the warehouse and the customer - must function smoothly and seamlessly.

Agreed delivery dates must be adhered to

Compliance with the agreed delivery dates is also essential for successful cross-docking. So it's about designing and controlling the processes in such a way that the right products in the right quantities are delivered to the right customer at the right time. And with cross docking, this only works together: All supply chain partners must be and remain integrated.

Ensure data and information flow in "real time"

Cross docking places very high demands on necessary IT solutions in particular. The system behind it must guarantee the corresponding flow of data and information in "real time". Master and movement data must be correct, information and goods flows must be synchronized. In addition, employees must understand and be able to use the system. Nor should the transparency be neglected, which is necessary so that employees can keep track of things and don't make mistakes. Here, complex storage technology may have to be integrated into the system.

Create sufficient space in the handling area

The space requirements and the necessary structural conditions in the handling area must also be taken into account. Sufficient preparation and transport space as well as processing space must be available. In addition, a sufficient number of loading gates is required for the customer- or tour-related collection of goods.

Conclusion

Designing and integrating cross docking is a complex process. The effort required for this should not be underestimated. Cross docking is therefore particularly interesting for companies that handle large quantities and work with a clear number of standardized logistical units. Cross docking is therefore particularly suitable for distribution networks with many incoming and outgoing goods and quantities that can be planned. This is the case in retail, for example, where the individual branches are usually supplied via central warehouses.