Supply Chain: Lowering Your Total Cost of BusinessCross docking as a supply chain strategy can be used in a variety of ways

Cross docking is a supply chain strategy that does away with the warehouse–at least in theory. An example of cross docking is when freight from incoming trucks is wheeled across the shipping dock and loaded directly on outbound trucks without entering a warehouse. In reality, cross docking as a supply chain strategy is generally more complicated; for instance, outbound trucks can be delayed. As a result, there is usually at least some allowance for short-term storage in a supply chain model that relies on cross docking.

The use of cross docking as a supply chain strategy is aimed at reducing storage, handling, and labor costs while increasing fulfillment speed. It is the embodiment of just-in-time (JIT) delivery and does make good on these benefits. However, cross docking can also be complicated to arrange, must be continually updated to keep up with changing demands, and the absence of long-term storage means that the strategy can be unforgiving of errors, delays, or other interruptions. It is not a suitable practice for all product types, but a cross docking strategy for specialized product chains or certain channels in a larger network may make a company more competitive while decreasing costs and satisfying customers more quickly.

The Types of Cross Docking Found in the Supply Chain

Loading a truck during cross-dockingCross docking in the supply chain generally follows one of two different models. The first is a single channel point-to-point model that is usually used when transferring freight from one mode of transportation to another. Transferring pallets from a train car to a truck or cargo containers from a ship to a truck are both good examples. The more common model for a cross docking is a hub-and-spoke system similar to that used at U.S. airports. Freight coming from long distances arrives at a central location where the large load is broken up into smaller lots as it is offloaded. These lots are then taken across the loading dock to smaller vehicles that serve nearby locations. This is similar to the way passengers disembark from large jetliners to smaller planes serving smaller airports. Cross docking strategies can be further categorized by the load level that outgoing shipments are broken into:

  • Load Unit Level: In load unit level cross docking, pallets are transferred intact from one form of transportation to another. There is little to no handling of the products at the facility and they are simply moved from one vehicle to another. It is simple, quick, and cost-effective with little overhead.
  • Case Level: Products are shipped out in cases or as individual cartons. Essentially, larger incoming loads arrive on pallets and are offloaded and broken down to individual boxes. They are then shipped out as individual parcels. The redistribution is determined by individual Stock Keeping Unit (SKU) on the carton. This is the model that underlies most online retail sales and delivery, and final distribution is usually through parcel services.
  • Mixed Case Level: Cross docking at the mixed case level requires the most labor and equipment. Incoming pallet loads are not transferred as-is or merely broken up; instead, they are unpacked, sorted, and redistributed onto new pallets for final shipment to the end customer.

In most cases, cross docking as a supply chain strategy involves implementing all of the above methods, sometimes in the same facility. The biggest challenge is keeping those channels that are working with different load sizes connected without error. In addition to the size of the lots being transferred, there are also multiple methodologies used for cross docking at every individual transfer station that also need to be managed.

Cross Docking in Receiving and Distribution

Temporary storage during hybrid cross-dockingCross docking distribution centers are essentially transfer stations with little to no storage space. However, cross docking also takes place at large warehouses and distribution centers that specialize in storing large quantities of products. In these cases, the practice of cross docking is usually applied only to a small proportion of the products that the warehouse handles. Cross docking may be applied in different ways as the business model of a specific location dictates, such as:

  • Opportunistic Cross Docking: In many distribution centers, cross docking only occurs when circumstances require it. Priority items for which a customer paid extra for urgent delivery or products that arrive late may skip the usual processing and proceed straight to the loading dock in order to meet a deadline. Cross-docked products may be shipped individually or be combined with inventory in the warehouse for the final shipment as needed to fulfill the order.
  • Hybrid Cross Docking: In this model of cross docking, both long-term storage of products and quick throughput of products without storage are a normal part of operations. Cross-docked products are regularly combined with products that are stored long-term. The resulting mixed case loads are then shipped out.
  • Consolidated Cross Docking: Distribution centers that combine incoming shipments from two forms of transportation are consolidating loads. The rapid throughput of these locations means that there is little need to store products for any length of time; they are effectively large-scale product transfer stations. They can be found close to manufacturing points, where they create consolidated loads for long-range shipment by rail or sea vessel.

Hybrid and opportunistic cross docking at warehouses is the most common practice.

A warehouse or distribution center may practice any or all of these forms of cross docking as its needs and circumstances dictate. While there are distribution centers that specialize solely in cross docking, they are in the minority. Hybrid and opportunistic cross docking at warehouses is the most common practice. The result is that for most logistics managers, cross docking as a supply chain strategy is a complicated and often attention- and resource-intensive task simply because it is an outlier operation. Since cross docking as a supply chain strategy is so unforgiving, it is advisable to make use of technology that supports the practice.

Technology Enables Cross Docking As a Supply Chain Strategy

An RFID tag can make cross-docking more efficient.Just as lean supply chain management came into vogue in the late eighties and nineties when the widespread availability of capable business computers made it feasible, cross docking and other just-in-time delivery methodologies wouldn’t be possible without computer technology. Managing all the products in numerous channels across the vast distances of a continent-wide supply chain demands it. Even with all the computer technology in use today, mistakes and missed connections still occur.

The remote readability of RFID chips makes it easy to keep track of pallet loads.

A potential solution is wider implementation of Radio Frequency Identification (RFID) tracking. RFID chips transmit a simple identification code when a signal gives them power. This transmitted code can be picked up remotely, and when linked to a database, can be used to easily and accurately record product movement. The most cost-effective way to make use of RFID technology is by integrating the chips into shipping platforms like pallets. This can make cross docking as a supply chain strategy both simpler and more effective. However, the chip needs to remain in place during the lifetime of the pallet, which makes flimsy wood pallets undesirable for use with RFID tech.

One solution is the use of RFID-enabled plastic pallets. A chip is easily embedded in a plastic pallet to provide load unit level tracking. The remote readability of RFID chips makes it easy to keep track of pallet loads, ensuring that their location is transparent across the entire supply chain and helping prevent missed connections. 

The iGPS plastic pallet pool provides a nationwide network of lightweight, intelligent plastic pallets. The iGPS pallet is equipped with GS1-compliant RFID chips for ease of tracking and support of cross docking as a supply chain strategy. To make the switch, give our team a call at 1-800-884-0225, email a specialist at [email protected], or visit our contact page.