Eliminating warehousing from your supply chain reduces the time, cost, and effort in transporting cargo to its final destination. It’s called cross-docking, and it trades handling and storage for efficiency gains.
Cross-docking facilities work by quickly transferring freight from one truck to another, ready for forwarding. Imagine your cargo is being transported from Phoenix, AZ to San Francisco, CA. The first leg of the journey is by truck from Phoenix to Los Angeles, where another truck will take the cargo on to San Francisco. Rather than unloading, sorting, and storing the cargo in a warehouse, it will be loaded directly onto the next truck.
In this article, we discuss four key benefits of cross-docking, as well as how to decide if it’s right for your business.
1. Reduced handling
With a traditional warehousing model, cargo is often moved in and out of storage areas; unpacked, picked, repacked; and handled multiple times by people and/or equipment. Each time an item is touched, the chance of it being damaged or misplaced increases.
However, cross-docking eliminates most of this handling (and the problems accompanying it). It allows shippers to significantly minimize inventory loss and prevents unsaleable items from reaching customers. Overall, it translates into a better customer experience and fewer returns, helping mitigate lost revenue.
2. Lower warehousing costs
Warehousing space can be very costly, especially if it’s positioned in an urban area and/or near a major port. Depending on your specific needs and processes, cross-docking can reduce the need for warehousing — or eliminate it entirely.
Let’s say you don’t have many products to store. A small warehouse or cross-docking facility could suit your operations, rather than leasing expensive space beyond your needs. Warehouses intended for cross-docking don’t have shelving and can be smaller than a warehouse meant for storage; this can result in sizeable cost savings. Add the benefit of less ongoing maintenance, and the savings only improve.
3. Lower labor costs
With cross-docking, cargo generally only gets transferred from one truck to another. Since picking, packing, and re-palletizing aren’t necessary, fewer people are needed to get cargo where it needs to go. By reducing warehouse labor, you can further reduce costs like employee wages and associated costs such as recruitment, health benefits, uniforms, protective equipment, and liabilities that all add up.
4. Reduced lead time
Done right, cross-docking can result in shortened lead times. With an efficient, streamlined cross-docking process, and little-to-no storage time, you can move cargo from one vehicle to another and on its way to its destination faster. Expediting the fulfillment process allows shippers to meet customer expectations for fast delivery and help ensure repeat business. The greater your throughput, the faster inventory turns over, which increases your profitability.
Cross-docking considerations
If you are wondering whether cross-docking is right for your business, don’t overlook these considerations:
The types of freight being transported — Many, but not all goods are suitable for cross-docking. Those that make the most sense move quickly with minimal to no storage requirements. For example, high-volume or recurring shipments are the easiest to manage, similar to items consistently in high demand. Another suitable type of freight is cold-chain items like food and medicine that need to be transported fast.
The partners you may rely on — For cross-docking to be successful, it requires precise coordination and reliability from your transportation partners. In the event trucks don’t arrive on time, it can throw off the flow of the operation and require cargo to be stored short-term until the outbound truck arrives. Cross-docking must run like a well-oiled machine and that comes through experience.
The initial setup requirements — A cross-docking system can be challenging to plan and set up independently. A large amount of capital is required and it can take a while to build up efficiency and see a return on investment. Instead, many shippers opt for cross-docking services.
Conclusion
For businesses with high-volume or cold chain operations, cross-docking smooths the fulfillment process for the supply chain and your customers. Reduced cargo handling and lead times forward freight faster in the best possible condition. And by choosing a cross-docking facility, you can cut warehousing and labor costs and increase profitability.
For cross-docking to be worth the outlay, precise planning and coordination are necessary, though it can be difficult to optimize. One way to solve these challenges is to work with a 3PL partner that offers cross-docking services, like GlobeCon. We have a proven track record in seamlessly moving customer freight to ensure you deliver on time as expected.
Looking for a reliable cross-docking partner? Contact the team at GlobeCon.