What Is Cross Docking?

Cross Docking: What Is It?

Cross docking optimizes transportation costs and warehousing costs of goods in the supply chain, by removing the need for storage to hold inventory in between transits. Cross docking normally occurs in a distribution docking terminal or a cross dock facility. Typically, full inbound trucks carrying one type of cargo arrive at one side of the cross dock, and full outbound trucks with mixed cargo leave from the other side. Cross docking allows for transport efficiency, where a delivery of a full truckload of a single item to a single location is not needed or wanted.

For example, if you are a retailer with a cross-dock operation, you can receive a full truckload from a supplier (e.g., shampoo), sort it in the cross-dock, and combine items from multiple inbound trucks. Then, you can send a full truckload with mixed items to your stores, reducing the need for multiple deliveries. This streamlines inventory management, saving time.

The LTL (Less-Than-Truckload) freight carriers industry relies heavily on cross-docking. In this model, a truck is loaded with pallets of items at one location, each bound for different destinations. As a crucial component of the transportation and logistics sector, LTL specializes in transporting smaller shipments that don't need a full truckload. Instead of dedicating a truck to a single shipment, LTL carriers consolidate multiple shipments from various shippers into one truck. This efficient method, often facilitated by cross-docking, ensures that goods reach multiple delivery points effectively. Cross docking helps minimize the need for long-term storage of goods. In this process, incoming shipments from different suppliers are temporarily unloaded at a cross docking terminal or distribution center. Instead of being stored, the products are quickly sorted and then reloaded onto outbound trucks for delivery to their respective destinations, helping to streamline the supply chain and reduce handling and storage costs.

What Is an Example of a Cross Docking Operation?

To visualize a cross docking operation, imagine a hallway-like setup with numerous doors on either side. In a distribution center, you will have delivery trucks on one side of the center that arrive with items manufactured by various manufacturing companies, and on the other side, you will have mixed loads with workers filling up multiple pallets from the various inbound trucks. There could be numerous cross docking operations happening simultaneously.

A real-life example of a cross docking operation is where various retailers are receiving goods from a manufacturer that is required to be distributed across multiple stores across a national network. The manufacturer will first move this into the first cross dock at its distribution center or warehouse where it is being separated out to be delivered to the distribution centers of different retailers.

When the goods arrive at the retailers' own distribution centers, they will have another cross dock operation in order to fill trucks to deliver the goods to the various retail stores. Think of this as an old-fashioned organizational chart that starts from the top and gradually fans out as the grid gets bigger.

This process efficiently uses warehouse space to ensure that goods are stored and moved in an organized and efficient manner. 

Companies offering cross docking services play a crucial role in ensuring the efficient transfer and distribution of goods. These services help streamline the supply chain, reduce storage costs, and speed up delivery times by minimizing the need for warehousing and handling.

What Are the Advantages of Cross Docking?

The main advantages of a cross docking implementation are the cost savings and efficiencies that it can provide to manufacturers, retailers, and logistics providers.

If there are immediate needs for a particular good, as soon as it hits the receiving dock, if the business has a system that can recognize the goods, it can use the cross docking process to move those goods directly to shipping and ship out to a customer.

Cross docking is being used across multiple industries and e-commerce leaders are continuously innovating strategies to trim time and distance to the consumer, such as drop shipping and pushing inventory to stocking locations where they have forecasted demand.

Rapid, efficient cross docking ensures inventory flows rapidly, reducing storage costs and improving delivery times. Cross docks are a key component of an efficient supply chain operation, minimizing the need for extended inventory storage and thereby streamlining the entire process.

An effective cross docking solution has numerous benefits:

• Increases productivity — the same staff can now cross dock and ship more orders per day.
• Improves shipping times for higher customer satisfaction. 
• Improves utilization of material handling equipment .
• Improves vehicle utilization — trucks are fully loaded with the right shipments and shipments are aggregated to minimize mileage.
• More environmentally friendly —  By consolidating shipments, reducing warehousing needs, and minimizing transportation distances, cross docking can also help businesses reduce their carbon footprint and contribute to environmental sustainability.
• Reduces handling — Since products are not being stored and picked from the warehouse, there's less chance of product damage. Fewer touches can also mean fewer chances for errors.
• Allows for greater flexibility  — Cross docking can accommodate a variety of product types and customer requirements, offering greater flexibility in handling complex supply chain needs.