It's essential to know where orders are and how long they'll take to get to your customers when running an ecommerce or retail business. To drive loyalty and satisfaction, you want reliable fulfillment options that stick to a tight schedule and meet customer expectations. You also want to save money and avoid paying high fulfillment costs. The way you receive and send out shipments to fulfill orders may determine how much you spend on order fulfillment. Certain methods allow you to avoid having a dock warehouse. Others require a fulfillment center. Some require no cross-dock facility at all. Here's what you need to know about order management and the logistics of transporting orders to their final destinations.
What is cross-docking?
Put simply, cross-docking is a practice used in logistics management. It includes unloading delivery vehicles and immediately transferring the products into outbound shipments to save time and money. This minimizes or eliminates storage time.
Cross-docking has many advantages, including:
- Streamlining the supply chain and cutting back on warehousing costs
- Improving customer satisfaction with cost savings and faster delivery
- Reducing the risk of damage to inventory through smooth transfers
- Reducing the cost of inventory storage, reducing storage time and saving money
- Cutting back on transportation costs
- Speeding up the transfer of items from the distributor to the customer
Types of cross-docking
There are several kinds of cross-docking, and the one you choose will depend on your business's specific needs. The most common types are:
- Just-in-time cross-docking
- Opportunistic cross-docking
- Consolidation arrangement method cross-docking
- Deconsolidation cross-docking
- Flow-through distribution
- Hybrid cross-docking
- Retail cross-docking
Here’s what you should know about each.
Cross-docking strategies for inventory holding cost reduction
Cross-docking strategies are designed to help reduce inventory holding costs. The key to maximizing savings is to minimize the need for storage and warehousing whenever possible. Below are an in-depth look at seven effective cross-docking strategies to consider.
1. Just-in-time (JIT) cross-docking
A just-in-time, or JIT, shipping method is one in which the shipments skip the warehousing process. Shipments come directly from the supplier and head out immediately to the next stakeholder. That stakeholder could be the person who placed the order, for example.
With JIT cross-docking, you keep the supply chain and transportation process lean. While you might still have a distribution facility, you don't store anything there. Instead, it's only used to facilitate the transfer of products from one truck to another (for example), so they can get back on the road and go to the products' final destinations.
2. Opportunistic cross-docking
Opportunistic cross-docking is when you transfer a product directly from its inbound transportation to outbound shipping docks based on known demand. For example, if a shipment of 20 cases of video games comes into the warehouse and the management system recognizes that 20 cases need to go out to retail stores, those cases will be transferred directly from the incoming transportation, such as a delivery truck and placed into an outgoing delivery truck.
3. Consolidation arrangement method cross-docking
Consolidated cross-docking takes several smaller unit loads and consolidates them into a larger load for outbound delivery. These loads might come from multiple suppliers, but they can be placed into a larger outbound shipment to save time and money.
4. Deconsolidation arrangement cross-docking
Deconsolidation arrangement cross-docking is the opposite of consolidation cross-docking. With this method, a full shipment from a supplier or distribution center is broken down and relabeled to be sent out in different loads across multiple delivery vehicles.
5. Flow-through distribution
Flow-through distribution, also known as flow-through cross-docking, is a straightforward process. Products come into a distribution center, and they're then sorted by their delivery destination rather than in a central location. After this sorting occurs, they are placed on trucks at the outbound dock doors and head out to their destination.
With this process, the goal is to minimize storage and handling time. It's a constantly flowing process, which is how it gets its name. Flow-through distribution effectively eliminates warehousing, speeds up delivery times and reduces inventory levels within the distribution center itself.
6. Hybrid cross-docking operations
Cross-docking solutions sometimes work well on their own, or you may need to opt for a hybrid solution. The hybrid cross-docking technique involves traditional cross-docking methods with warehousing, allowing some items to be stored and others to ship out right away.
With hybrid cross-docking procedures, most items are sorted and shipped as quickly as possible. If they can't be shipped out immediately, though, they can be stored within the warehouse for a short time.
Why would you use this method? Think about this scenario: You're a company that sells many products each day, but three are in high demand. You may choose to store extra of those items in your warehouse because you know they'll sell, even though they haven't sold yet. All other orders move through their transfers quickly and are fulfilled, but the stored items only get shipped out when they actually sell.
7. Retail cross-docking
Retail cross-docking involves receiving many products from different vendors. Those products are combined into outbound trucks’ loads, and those loads are delivered to various retail stores.
Retail cross-docking is used to create a seamless transportation method among suppliers, manufacturers and retailers or distribution centers to reduce storage and handling costs; it includes quick sorting and immediate outbound shipment to avoid holding products in a warehouse.
Implementation considerations for cross-docking strategies
Cross-docking strategies can work well to cut down on delivery time and can even help you save money by reducing the warehouse or distribution center space you need, lowering your overhead costs. However, to successfully use cross-docking strategies, you will need to be careful about how you implement them.
Keep these key elements in mind as you work on setting up your preferred cross-docking method:
- Supply chain visibility: Supply chain visibility helps you track inventory levels, order status and other important aspects of the fulfillment process. It is an essential part of cross-docking implementation, because without it, you could lose track of items or see delivery delays.
- Facility design: Another thing to keep in mind is your facility's design or warehouse layout. Some are more appropriate for some cross-docking methods. For example, if you don't have a cross-dock warehouse, you may want to try JIT cross-docking so you don't need storage facilities during the shipping process. On the other hand, if you have a large fulfillment center already, you could consider a hybrid approach or implementing flow-through cross-docking, since these methods would use the space you already have.
- The products you work with: Remember the types of products you work with may limit the way they're stored or transferred. Some products are perishable or need to be kept at specific temperatures. Others can be stored indefinitely. You'll need to choose your cross-docking method based on which one is right for your shipments.
- Your suppliers' willingness to work with you: The suppliers you work with will need to be open to your chosen cross-docking scenario. If they are not willing to work out timetables or ensure deliveries get to you on time, working with JIT cross-docking or other forms where storage isn't used may be out of the question. The real key is figuring out which suppliers maintain an appropriate schedule and have good communication channels so you can make cross-docking choices that work with incoming deliveries. If packing requirements or delivery schedules can't be followed, then you will likely need to stick with a traditional warehousing style. That option may cost you more money in the long term. If you run into that issue, consider looking into other suppliers and determining if you can switch to a supplier or distributor that is willing to work with you.
Get unmatched real-time inventory visibility
Cross-docking solutions are among the best to help you save money and time when transferring incoming shipments to outgoing transportation. Depending on the situation you have with your supplier, you may be able to use just-in-time, opportunistic, consolidation, deconsolidation, flow-through, hybrid, or retail cross-docking to improve delivery times, cut down on costs, and make it easier to manage your products.
At Cart.com, we can help you get unmatched real-time inventory visibility into your supply chain. Let us help you save costs, grow your business and boost customer loyalty with our expert omnichannel fulfillment services. Contact us today to learn more.
