How to crossdock successfully
Offering variations on the same theme, eight crossdocking techniques deliver distribution efficiencies and cost savings.
By Sara Pearson Specter, Editor at Large -- Modern Materials Handling, 1/1/2004
Since the concept's been around for almost 20 years, you might think crossdocking would be a common practice. After all, transferring pallets or cases of product directly from receiving to shipping, without first placing those items into storage, clearly cuts costs and creates efficiencies. Nevertheless, crossdocking is not that common for a variety of reasons, says Bruce Strahan, partner, The Progress Group (770-804-9920, www.theprogressgroup.com).
According to Strahan, crossdocking isn't as widely used as it could be for five reasons:
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An inability to successfully manage/calibrate the inbound supply cycle and synchronized timing needs;
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Purchasing, transportation and distribution systems are not adequately linked to the supply chain pipeline;
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The risk of failure encourages order fulfillment from in-house inventory (companies sell what they have on hand, not what will arrive);
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A perception that crossdocking is something only the biggest companies can do; and
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The tendency to design "one-size-fits-all" processes, disregarding the opportunities to aggressively manage special situations on a regular basis.
But crossdocking doesn't have to be this way. Those obstacles can be overcome. Furthermore, crossdocking itself can be tailored to the conditions at hand to maximize performance.
"It's important to recognize that crossdocking is not a generic term that means just one thing," says Strahan. In fact, he has identified eight different crossdocking techniques that create alternatives to traditional stage-putaway-pick-replenish distribution.
The first three are characterized by the requirements of the crossdocking process, relative to handling steps, systems needs and facility needs. The last five are characterized by the inventory flow characteristics that make crossdocking possible. "In order for each kind of crossdocking to happen, however, there are certain enabling capabilities that need to be in place, starting with adequate visibility of inbound materials matched up with outbound needs," he adds.
Those, too, are included with each listing. When done correctly, Strahan says, these eight crossdocking best practices create new handling efficiencies and reduce costs.
Click on the icon to read the web exclusive sidebar about crossdocking at S.P. Richards Co. (Crossdocking in action)
Pure Crossdocking
What is it?
A one-step, direct move from receiving dock to shipping dock; trailer to trailer. Either cartons or pallets.
Enablers
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Accurate use of Advanced Shipment Notices (ASNs)
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Real-time warehouse management system (WMS)
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Materials identified by bar codes or radio frequency identification (RFID) tags
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Both inbound and outbound trailers there at the same time
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Enough dock doors
Of note:
This practice is fairly common in LTL and parcel transportation hubs, and with regional inbound (multi-assembly plant) standardized pickup routes from tier one automotive suppliers.
Short-term Staging
What is it?
Inbound items are staged short-term and accumulated at the dock (not putaway) for a period of time, then shipped out. Can be divided upon receipt by destination, or accumulated intact until ready for distribution.
Enablers
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Accurate use of ASNs
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Real-time WMS
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Staging area
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"Reasonably" close timing between inbound and outbound
Of note:
The key words are "short-term" so "staging" doesn't become another way to say "storage." Materials handling and staging processes need to be well engineered to make this practice beneficial.
Trailer as Warehouse
What is it?
Use of trailer in yard for storage of one single kind of product (sorted to trailer either prior to receipt, or upon receipt). Products are generally bulky, high volume, or promotional in nature.
Enablers
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Real-time WMS
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Accurate knowledge of trailer contents
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Yard management system
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High cube throughput product, received from supplier in full trailer quantities
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Enough dock doors
Of note:
This is an inexpensive and simple way to experiment with crossdocking when you buy a small number of stock keeping units (SKUs) in truckload quantities.
Back-Order Processing
What is it?
Late-arriving product that needs to be shipped to fulfill outstanding orders. Makes more sense to fill orders upon receipt at dock rather than accepting into inventory and storage, and then treating as a normal orderpicking process. It is a technique for dealing with a common problem that reduces time and processing costs.
Enablers
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Real-time WMS with back-order processing capability
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No inventory in stock
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A well-designed process that accomplishes the function efficiently, and with adequate controls
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Easiest when sending outbound shipments by parcel
Of note:
The first appearance of crossdocking was probably this type, and it is probably the most frequently used. However, many who crossdock back orders have not designed the operation to be a formal, efficient process.
Special Order
What is it?
Item ordered for a specific customer, or to support a specific sales promotion that is not part of standard inventory. Rather than putting the item away upon receipt, it's shipped out directly to customer. Typically involves small number of SKUs.
Enablers
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Real-time WMS
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Order for an item that isn't stocked, or isn't stocked at currently ordered level
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Timing of receipt coordinated with committed distribution date
Of note:
Strahan believes this is an area of great opportunity for many companies, although the inbound/outbound timing is often not calibrated to permit crossdocking.
Opportunistic
What is it?
Fill portions of outstanding orders with product currently being received, even though enough inventory to fill the order currently exists in the warehouse. Warehouse inventory is bypassed for the sake of handling efficiency (i.e. opportunistically eliminate some level of putaway and replenishment transactions).
Enablers
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Real-time WMS that will allow you to bypass previously stored inventory. The WMS must have the ability to recognize the receiving dock as a pick face with higher priority than the traditional pick zones.
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No rigid first-in/first-out (FIFO) controls (i.e. no strict expiration dating)
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High-volume product that's received several times a week
Of note:
The idea of bypassing strict FIFO rules may frighten the inventory control organization. But, it's a great way to experiment with crossdocking with the safety of reserve inventory.
Pre-committed Push
What is it?
Receipt (typically purchases from suppliers) already has an outbound customer identity. Arrives in full pallets that are split upon receipt and shipped.
Enablers
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Real-time WMS
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Buyers that pre-allocate purchases to stores, either at time of purchase, or preferably just prior to receiving shipment, (i.e. adjustments based on actual store activity within purchase/shipment cycle)
Of note:
Crossdocking of inbound materials on a large scale began with this practice in retail distribution. Contemporary practices delay the final decisions for store allocations until the last moment, making adjustments based on the latest views of store sales and inventories.
Push Work Upstream
What is it?
Upstream supply point picks and packages by store order. Arrives in pallets (mixed or single SKU) pre-picked and shipped straight through.
Enablers
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Real-time WMS
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Suppliers willing to provide value-added services
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Be a big enough buyer to get this service
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Ability and willingness to share data and information with suppliers
Of note:
This type is probably the most prevalent in terms of volume, with large customers moving inventory and handling steps to upstream suppliers or distributors.
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