What Is Cross Docking? Benefits Of Cross Docking In Transportation

1. What is Cross Docking?

Have you ever heard of cross-docking systems in logistics but don't know what cross docking is? Cross-docking is a goods distribution system whereby goods can be imported directly at a warehouse or distribution center. However, goods are not stored in warehouses but are always ready to be shipped to retail stores. Simply put, this is a logistics technique that eliminates the function of storing and collecting goods while still allowing exchange functions.

With the cross-docking technique, goods after receiving will not have to go through any intermediaries, but the incoming trailers will be transferred to the trailers that need to be sent. In particular, the goods in these trailers only take about 1 day, or even 1 hour, at Cross Dock before being shipped.

In logistics, cross-docking plays an extremely necessary role and has a close relationship with the supply chain, specifically:

• From a management perspective, building an effective cross-docking system takes a lot of time and is quite complicated. Implementing a cross-docking activity means that channel partners will experience increased costs or friction along the way.
• On the supply side, suppliers may request smaller shipments. Besides, the shipment must be labeled or barcoded if necessary. On the demand side, customers may be asked to place orders by a certain date or allowed a lead time for more deliveries within a few days. All this leads to increased costs and increased coordination between channels.

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2. These items are suitable for the Cross Docking system

What is cross docking? What items are suitable for cross-docking systems? These are all questions that many people are interested in when it comes to the distribution of goods. A product considered suitable for the cross-docking system must meet two criteria: large enough volume and low enough volatility. If demand is uncertain, this distribution system cannot be applied. Below are a few items that can be applied to cross-docking!

• Perishable items: These are goods with special characteristics. Transporting requires careful and quick action.
• High-quality item: This item does not require too much strict quality control. However, it is also necessary to transport carefully to avoid affecting the quality of the goods.
• Items clearly labeled, barcoded, or RFID-tagged: This is the type of product that will be shipped immediately when the customer needs it. In particular, this item is only for sale to customers.
• Key retail items with small fluctuations: These are considered key goods. This commodity is always stable, and its volatility is quite low.
• Pre-ordered items: Pre-ordered items are goods that have been pre-ordered and packaged by the customer at a factory or warehouse and now need to be shipped.

3. What is Cross Docking classification?

Besides information about what cross docking is, the classification of cross-docking is also an important issue that cannot be ignored. The correct classification of cross-docking will make it easier for businesses to build a goods distribution system. So what types of cross-docking are there today? Refer below!

• Production Cross-docking: This is a system that helps support and collect input goods. Besides, it also helps provide maximum support during the production process.
• Distributor cross-docking: This activity helps businesses collect input products from different suppliers onto one pallet. This pallet will be handed over to the customer immediately after the final product is received.
• Cross-docking: This is the activity of combining shipments from several different carriers in LTL or small package form. The purpose of this activity is to bring benefits in terms of economies of scale.
• Retail cross-docking: This is the process of receiving products from suppliers. Then take the received goods for classification and distribution to retailers.
• Cross-docking opportunity: This form can be used for any warehouse, directly transporting goods from the receiving area to the shipping area. From there, meet certain known needs.

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4. Distinguish between Cross Docking and traditional warehouse

To help you better understand what cross docking is and not confuse this form with traditional warehouses, below is the difference between cross-docking and traditional warehouses.

• In the traditional warehouse management model, warehouses must always ensure that the quantity of goods they have is maintained until there is an order from a customer. Then, the goods will be selected, packaged, and shipped to customers. In contrast, with the cross-docking system, customers will know the type of goods before arriving at the warehouse, and the goods will not need to be stored at the warehouse.
• Traditional warehouses always follow four processes: receiving, storing, collecting, and sending goods. However, storing and collecting in traditional warehouses costs a lot of money. Applying cross-docking will save a lot of storage costs. Besides, it only takes you a day or a few hours to receive the goods.
• While in a traditional warehouse, goods are always available, in the cross-docking model, there are no goods available in the warehouse. Therefore, to be able to sell goods, it is necessary to transport goods from the supplier to the warehouse. Cross-docking is only used in cases where there is a strict commitment to delivery time.

5. Cross Docking process in logistics transport

What is the cross docking process, and how many steps does it include? Immediately refer to the cross-docking process that Dolphin shares here!

• Receiving goods: Small orders or large shipments will be delivered to the cross-docking facility from the supplier or manufacturer.
• Checking and classifying goods: Staff at the Cross docking system will check the quality and packaging of orders. Then, continue to classify orders by receiving location.
• Plan to send goods: Here there will be staff in charge of arranging and sending goods to different locations based on delivery information.
• Shipping: The shipping time is very fast. Therefore, when goods are transferred from receipt to delivery, it is guaranteed that they do not need to be stored in the warehouse for too long.
• Goods inspection: Goods will be checked again and packaged to ensure safety during transportation.
• Delivery: Goods will be delivered to customers. Or the goods can also be transferred to the next unit.

6. Advantages and disadvantages of Cross Docking

There is no denying the benefits that cross-docking brings. But besides cross-docking, there are disadvantages that affect the business's goods distribution process. So what exactly are those advantages and disadvantages?

6.1. Advantage

The advantages that the cross-docking system brings to businesses are:

• Reduce inventory costs: In some cases, waste is calculated by retailers associated with keeping inventory in stock for items that are stable and in high demand. Therefore, the cross-docking system is a way for businesses to save on inventory holding costs.
• Reduce shipping costs: Often businesses will spend a lot of money to use small freight shipping services. However, with cross-docking, orders will be consolidated to reduce input transportation costs and simplify the process of receiving goods.
• Optimize the inventory and storage system: Goods in the supply chain circulate quite quickly because they do not have to be stored for too long. This helps businesses reduce worries about inventory or the storage of goods.
• Reduce loading and unloading costs: Not having to store goods and release inventory in the warehouse will help reduce loading and unloading costs.

6.2. Defect

Possessing many advantages, cross-docking still makes businesses worried because:

• It takes a lot of time: to build an effective cross-docking system. If management does not monitor operations well, the business will encounter many problems in the transportation system.
• Large investment capital: Just starting out, businesses will encounter difficulties in establishing an operating structure. This causes businesses to spend a huge amount of money.
• Depends on suppliers: Goods depend a lot on suppliers. Businesses can deliver goods late if the supplier has problems. From there, it leads to business losses and a loss of reputation.
• Transportation problem: Cross-docking is mainly transported by road, so the cost is quite high. In addition, the place where goods are gathered needs to have a large space so that employees can move the goods.

7. Factors affecting the Cross Docking system

An effective cross-docking process depends a lot on different factors. So what are the factors that affect the cross docking system? 

• Management system: Cross-docking is characterized by very fast inspection, distribution, and transportation of goods. Therefore, when carrying out the process of arranging and classifying items, precision and smooth coordination from all departments are required.
• Information technology: With support from software, storing warehouse information, barcodes, order codes, or product types is also more secure. This helps avoid errors during operation.
• Collaboration with suppliers: Cross-docking will require a lot of support from product supply partners. Consistency in goods, information, time, and related documents will help the system run more smoothly.

Cross-docking is an effective logistics technique, bringing businesses many benefits. Hopefully, through the information that Dolphin Sea Air has just provided about what cross docking is, it has helped readers get useful information about cross-docking!

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