Cross-Docking Distribution Center (DC)

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Cross-Docking Distribution Center (DC)
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Three ways for the distribution

• 1. Traditional Warehousing/Distribution, in which
  vendors ship goods to retail DCs, where the goods
  are stored until store orders need fulfilled,
  where they are then picked (often using a "wave"
  process" for batches of stores) and delivered to
  the stores.
• 2. Crossdock DCs, in which shipments from inbound
  suppliers are moved directly to outbound
  vehicles, with very little if any storage in
  between. In the best possible situation, products
  never touch the floor or a shelf, though some
  amount of staging is often used.
• 3. Direct to Store Delivery, in which vendors
  ship goods directly from their own facilities to
  retail store outlets.

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The trade offs of crossdocking
Traditional
Crossdock
Direct to Store Delivery
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Cross-Docking

• Cross-docking favors the timely distribution of
  freight and a better synchronization with the
  demand.
• It is particularly linked with the retail sector
  (often within large retailers), but can also be
  apply to manufacturing and distribution.
• Cross-docking is mainly dependant on trucking.

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Advantages of Cross-Docking

• Minimization of warehousing and economies of
  scale in outbound flows (from the DC to the
  customers).
• The costly inventory function of a DC becomes
  minimal, while still maintaining the value-added
  functions of consolidation and shipping.
• Inbound flows (from suppliers) are thus directly
  transferred to outbound flows (to customers) with
  little, if any, warehousing.
• Shipments typically spend less than 24 hours in
  the distribution center, sometimes lt 1 hour.

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Direct to Store Delivery
LTL Less than Truckload
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Cross-Docking
TL Full Truckload
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Cross-Docking DC
Suppliers
Receiving
Sorting
Shipping
Customers
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Pre- and post-distribution

• In pre-distribution cross-docking, the customer
  is assigned before the shipment leaves the
  vendor, so it arrives to the cross-dock bagged
  and tagged for transfer. 
• In post-distribution cross-docking, the
  cross-dock itself allocates material to its
  stores. 
• For example, a cross-dock at a Wal-Mart might
  receive 20 pallets of Tide detergent without
  labels for individual stores.  Workers at the
  cross-dock allocate 3 pallets to Store 23, 5
  pallets to Store 14, and so on.

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Comments

• Pre-distribution is definitely more difficult to
  implement because the vendors of the cross-dock
  must know which customers of the cross-dock need
  what before they send the shipment. 
• This involves quite a bit of information
  transfer, system integration, and coordination. 

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The Cross-docking requirements

• The systems for a successful cross-docking on a
  large scale include
• automated material handling,
• warehouse management systems (WMS),
• order processing systems,
• quality controls systems,
• strong relationships between supply chain
  partners.

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Automated material handling systems

• An automated cross-docking system typically
  consists of a series of conveyors for receiving
  and sorting cases.
• Barcode scanners read an identification code on
  each case to track the product through the
  cross-dock system and, based on information from
  a WMS or an order system, the automated system
  sorts the cases to trucks or pallets for
  shipping.
• Bartolini Roma Sorting.wmv

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Warehouse management system

• Controlling the flow is critical in
  cross-docking.
• A WMS accomplishes this by receiving product
  information via WEB or EDI and keeping track of
  product movement.
• It supports the real-time requirements of
  cross-docking, receiving order details from
  customers and later informing them of the
  shipment's carrier and arrival date and time.
• The WMS also tracks warehouse performance,
  including labor and dock utilization.

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Importance of tracking performance

• Cross-docking demands a reallocation of
  resources, shifting the emphasis away from
  storage and order picking to receiving and
  shipping.
• For example, peak workload may intensify because
  it's more difficult to evenly distribute workload
  in cross-docking.
• Thus, the peak workloads length and when it
  occurs must be studied to utilize labor and dock
  equipment most effectively.

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The software

• Business systems may require special
  functionality to efficiently allocate inbound
  goods to existing orders, matching supply to
  demand.
• Some WMS permit opportunistic cross-docking
  functionality to allocate received product to
  current demand in real-time.
• And there is little stress on software systems
  when buyers predetermine distribution for special
  purchases or seasonal items.

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Quality control (QC)

• Stringent yet agile operations are increasingly
  important as the volume of cross-dock business
  increases, especially when handling new
  suppliers.
• Good QC is essential to avoid delays,
  bottlenecks, or the costs associated with
  shipping inferior product.

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Partner relationships

• Failing to establish a good working relationship
  with your supply chain partners can lead to
  failure in a cross-dock endeavor.
• The sharing of information, clear communication,
  confidence in the quality and conformance of
  goods, and product availability are a few
  characteristics that produce effective
  cross-docking.

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The plan

• Although the concept of cross-docking is simple,
  its implementation is complicated.
• Careful preparation is a must.
• Logistics managers who want to switch to this
  rapid system have to first establish a formal
  plan, including starting a cross-docking pilot
  program and evaluating its effectiveness.

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The implementation

• Once the plan is set, logistics managers must
  partner with other members of the supply chain to
  implement the system.
• Since cross-docking affects the entire supply
  chain, everyone's cooperation must be gained and
  adjustments made wherever necessary.

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The cost structure adjustments

• For example, if manufacturing has to pay extra
  costs to enable cross-docking through the supply
  chain, then the manufacturing cost structure must
  be readjusted appropriately.
• This applies to every member of the supply chain,
  such as trucking and packaging.