What is crossdocking?
Cross Docking is a logistics technique that eliminates the function of storing and collecting orders of a warehouse, while still enabling the receiving and shipping functions.
Warehouse operations without inventory
Of the four main functions of warehouse operations (Receiving, storing, collecting orders, sending goods) the two most expensive functions are storage (due to storage costs of inventory) and collection. goods (due to labor costs).
Cross Docking is a logistics technique that eliminates the function of storing and collecting orders of a warehouse, while still enabling the receiving and shipping functions. The main idea of this technique is to transfer shipments directly from trailers to trailers – bypassing the intermediate storage process. Conventional shipments take only a day at the Cross dock and sometimes less than 1 hour.
Cross docks are hubs that primarily handle sorted and grouped freight cars with other products and load them into outbound trucks. These vehicles will leave the Cross dock to a production area, a retail store or another cross dock.
What makes Cross Docking different from traditional warehouses?
In the traditional model, warehouses maintain stock until there is a customer order, after which the products are picked, packed and shipped. When additional orders arrive at the warehouse, they are archived until the customer is identified. In the Cross Docking model, customers are informed about products coming into stock and there is no need for storage.
So does that mean that in the Cross Docking model, customers (a retail store, for example) have to wait for more time to ship their goods to the warehouse? Yes, but this shipping must follow a strict and rigorous delivery schedule to compensate for any uncertainty associated with extending lead time (in this case lead time is from customer orders / or from the time the business deploys the order until delivery to the customer). On the contrary, if done correctly, Cross Docking will allow companies to eliminate inventory costs and reduce transportation costs at the same time.