Cross docking has become a more and more popular element of the supply chain. But what is cross-docking and how can it improve supply chain management?
Keyword(s): what is cross docking
If you ship products you’re probably wondering about all the different shipping options you have available.
Should you hire a company, should you use cross docking, or should you do it yourself?
With all the different types of shipment options, we’re going to focus on what cross docking is and see if it’s right for your business.
Keep reading our complete guide to answering your question ‘what is cross docking?’
What Is Cross Docking?
Cross-docking is fairly simple to explain and understand, but in actual execution, it can become fairly complex. Simply put, cross docking is when you unload products from one shipment and immediately put it into another shipment without storing the products in a warehouse or anywhere else in between.
The point of cross docking is to increase efficiency within the supply chain. Where cross-docking starts to get a little more complicated is when it’s used with different industries and parts.
When Should I Use Cross Docking?
Cross-docking can be very beneficial in many circumstances, here are a few of them:
- When demand for a product is high and consistent. Items that sell fast and sell often don’t need to be stored in a facility, they can be shipped right away because of how quickly they move.
- If you’re shipping something that’s perishable, like fruit or other food products, cross docking makes sense so the product can’t become expired in the warehouse waiting for shipment.
- If you’re a company that doesn’t require the specific stock to always be available and on hand (such as clothing stores) then cross docking is great for you to bulk ship random items.
Benefits of Cross Docking
Now that you understand what cross docking is, let’s take a look at some of it’s benefits:
- Using a cross-docking facility can cut your distribution costs by 50%.
- A reduction in facility operating costs due to cross docking facilities being smaller, and cost less to operate.
- Less inventory comes into play because when cross docking is done right, the supply can be managed to exactly match demand, meaning you don’t have to have a large inventory to fill your customers’ needs.
- Fewer transportation costs. You may think cross docking would increase your shipping costs, but actually it reduces it. When you use a company that knows what they’re doing and how to properly time everything, they can help you save money.
- More efficient retailing. When you receive fewer and more precisely timed shipments, the retailer requires less staff to get the shipment done.
All of these benefits ultimately lead to an increase in customer satisfaction. Cross docking allows people to get their products faster, making them more likely to come back to you again.