Cross-Docking: What is It and How Does It Work?

How fast and efficient is your business’s supply chain? If it is average, it might impact the growth of your organization. Because the goods transported to a different place will be stored in a warehouse first, then they get transferred to a vehicle and reach the destination. 

Due to this, the entire process becomes very time-consuming, and consequently, the warehousing costs are high. This is why opting for cross-docking is recommended. 

Cross-docking is a simple strategy where the unloaded goods from inbound delivery vehicles are directly loaded onto the outbound vehicles. 

The global cross-docking services market is estimated to attain a market value of 340 billion USD by 2030. Don’t you think it is time to make the most of this industry and propel your business to newer heights? 

To help you understand more about cross-docking its benefits, we’ve written this article for you. Read on to know further.

Cross-Docking: Meaning

Cross-docking is a shipment process that transports goods from one form of ground transportation to another with no storage time in between. Between the unloading and reloading from one vehicle to another, the products get sorted, scanned, and reconsolidated with packages that have the same next destination. 

Finally, the sorted packages get reloaded on the outbound transportation dock carrier to continue their journey toward the final destination.

With a cross-docking transportation system, the goods reach their final destination relatively faster, as they spend less time in the warehouse, and the material handling and storage costs get reduced significantly. 

However, cross-docking works best for these merchants dealing with the following types of goods:

  • Emergency goods that require immediate shipment
  • Products that don’t require quality inspections during transit
  • Staple products that are in constant, predictable demand
  • Pre-packaged orders from another warehouse

Importers and exporters generally work with the cross-docking shipping process, but almost any kind of business can benefit from it if their supply chain strategy and infrastructure support the process. 

Types of Cross-Docking

Two major types of cross-docking approaches are there: Pre-distribution and post-distribution.

1. Pre-distribution cross-docking

In this cross-docking method, the warehouse staff starts unloading goods as soon as the shipment reaches the dock, then sort and repacks according to the predetermined distribution instructions. So, inventory spends very little time at the cross-dock warehouse and reaches the destination faster than others. 

Retailers who want to consolidate shipments and reduce inventory levels often use this cross-docking type, as they have their warehouse and insights into products, suppliers, and delivery destinations. They generally receive products from a location and distribute them to individual stores or to an end customer. 

2. Post-distribution cross-docking

The distributors who want to increase their delivery efficiency often receive products from individual stores or customers and then again distribute them to other stores or customers. 

In this process, the goods stay stored in the cross-docking terminal until the customers are identified. That’s why the inventory could stay stored at the warehouse longer. In addition to that, the retailers or distributors also take a little more time to plan the shipment process based on current inventory counts, inventory forecasting numbers, and shipment destination. 

However, both types of cross-docking processes are efficient in regarding the field. If you choose according to your business needs, it will positively impact the overall efficiency of your supply chain.

How Does It Work? 

The cross-docking process works with Electronic Data Interchange (EDI) to inform you  about the deliveries in real time. 

The transporters need to be well-informed about some information, such a:

  • which incoming transport is going to arrive
  • when and at which gate
  • which goods need to be loaded on the outbound transport, etc., to plan the shipments accordingly in precise time slots. 

Otherwise, the cross-docking terminals could become congested due to minimal storage space.

Here’s how it works:

  • Truckloads arrive at the entrance dock doors of the warehouse
  • The goods are unloaded, sorted based on location, and loaded into the trucks waiting  on site according to the shipments’ destinations
  • The newly loaded trucks deliver the goods to the customers

What are the Different Methods that Cross-Docking Facilities Follow?

Three primary methods generally get used in cross-docking: 

  • The simplest method is continuous cross-docking. It’s a direct application that continuously moves the goods through a central site, from inbound to outbound shipments. It takes minimal storage and time to ship products. 
  • Consolidation arrangements are the second method that focuses on full truckload shipments to save fuel and expenses. In this process, smaller shipments get merged into one large load before processing the shipment. The smaller products are stored in the cross-duck warehouse for some time, and after a while, they process the shipment combinedly when they have enough goods to load the truck completely. 
  • The third one is deconsolidation, the opposite of consolidation, which breaks down a large load into several smaller ones instead of combining smaller loads to ease the transport process.

What is a Cross-Docking Warehouse?

In cross-docking operations, many deliveries take place in a single day. Hence, instead of traditional warehousing, they work with centralized distribution centers that provide value-added logistics services to meet customer demand. 

Previously, the retailers relied on multiple suppliers who sold products from their individual retail stores. Multiple vendors bring their products together in the cross-docking facility under one central location. 

From there, the retailers sort out the products, assign them to multiple carriers based on the shipment destination, and ship them to each store. 

This central location is called a cross-dock warehouse. With a minimal cost, it efficiently handles inbound and outbound shipments and offers a safe, enclosed space for unloading, sorting, and rearranging inbound goods before final outbound shipments.

How is the Warehouse System Different from Cross-Docking?

Traditional warehouses are designed to hold inventory, and warehousing stores goods on a long-time basis until they are purchased, or need to be delivered. On the other hand, cross-docking facilities directly transfer products from incoming to outbound transport without storing them in any warehouse. 

The product may be held in a cross-docking warehouse for some time while waiting for a truck, but the goods will be leaving once the truck arrives. The cross-docking terminals have an adequate transport fleet and fleet management system to deal with all outgoing and incoming transports. 

Some Notable Benefits of Cross-Docking

The cross-docking aims to reduce inventory storage, inventory holding costs, delays, and risks that come with traditional warehousing. So, the suppliers and traders use more than just inventory storage, embedded with expertise and technical efficiencies, to streamline the eCommerce supply chain.

The application of cross-docking into the retail supply chain has some advantages. Like –

Products get on the road faster

The automated cross-docking process simplifies and speeds up the loading and unloading processes. With the cross-docking process, the transporters simply receive the products, check their labeling, scan their destination and proceed them forward for shipment. 

Avoid breakage 

Cross-docking also reduces labor involvement in inventory handling to avoid damage. Since the goods are not going to store for a few days in the warehouse, there is no chance of inventory stock out, shrinkage, or becoming obsolete. It also decreases handling costs and delivery time.

Reduced labor costs and warehouse costs

When you cross-dock products, there is no need to pick or put away inventory stocks. Furthermore, in a cross-docking system, everything just gets transferred from one truck to another as fast as possible. That means there is no expense in warehouse rental for storage, and only a few workers are needed for moving goods from one truck to another. Thus, it provides a significant reduction in labor costs and inventory goods storage. 

Thus, the assistance of cross-docking helps you beat the competitors by shipping products at minimal costs within the shortest time possible.

Who can Benefit from Cross-Docking?

Any business can succeed in this cross-docking process if they deliver the product on time. They just have to ensure if its fits their business. Two main types of companies benefit from a cross-docking supply chain model.

Companies that sell time-sensitive products

Suppose your business sells high-demand products or perishable items that must be transported immediately, considering their shorter shelf-life. Opt for cross-docking. Because this method cuts the need for a supplier to store goods before it is sold to a different business. So, the time taken for the product to reach the end user is shortened. 

Companies using multiple suppliers

If your business entails moving goods to and from multiple suppliers to different destinations, then cross-docking can be useful. 

Because this method allows you to receive, sort, combine, and shipload quickly and efficiently from different vendors. Thus, it keeps transportation and warehousing costs to the bare minimum.

Implement Cross-Docking Using Upper Route Planner

The major disadvantage of the traditional supply chain strategy is high warehousing costs and late deliveries. Though you can cut the warehousing costs using the cross-docking method. 

To avoid the late delivery problem due to finding the appropriate route, we recommend using route optimization software such as Upper Route Planner. This software helps in creating an optimized route that helps you reach a destination on time. 

Also, it helps manage multiple deliveries within a period. You can take advantage of exclusive features like estimated time of arrival, proof of delivery, and one-click dispatch to make the delivery process smooth.

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FAQs

If freight/goods from incoming trucks are transferred across the shipping dock and loaded directly onto the outbound trucks without entering a warehouse, that process is called cross-docking. So, there is no need to store the incoming goods coming to the warehouse.

A cross-docking strategy reduces warehousing activities and labor by transferring goods from one mode of transportation to another in the docking facility immediately without storing them at the warehouse. Thus, the strategy helps achieve cost savings and also ensures faster fulfillment time.

Yes, cross-docking is sustainable. This is because by establishing cross-docking operational systems in supply chain networks, you can get environmental and economic benefits such as decreased maintenance, transportation, and storage costs.

Conclusion

Usually, cross-docking is a common word among importers and exporters with stable, regular demand and high inventory turnover. However, any business can use this concept if it fits with its supply chain strategy and infrastructure. If you are willing to outsource your shipping in the cross-docking process, then partnering with a third-party logistic shipment provider can help you implement cross-docking in your business.

Also, route planning software such as Upper is highly recommended to get optimized routes and deliver the goods on time.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel is the founder and CEO of Upper Route Planner. A subject matter expert in building simple solutions for day-to-day problems, Rakesh has been involved in technology for 30+ years. Looking to help delivery businesses eliminate on-field delivery challenges, Rakesh started Upper Route Planner with the ultimate goal of simplistic operations in mind.

https://www.upperinc.com/guides/cross-docking/