24 October 2021 How cross docking works, learn about its methods and the profits it generates, and find out if the strategy can be feasible for your business. When it comes to customer service, the transportation of goods is an important factor. Delivering on time and ensuring the quality of the requested product is essential to generate consumer satisfaction. That’s why, when it comes to delivery, a fast, efficient, and productive strategy is necessary. And even more: it does not generate high costs, as they can affect your company’s profitability and also the final amount paid by the customer. The cross docking solution was created to bring agility, assertiveness, and cost reduction. In the literal translation of the term, cross docking means “crossing the docks.” In a warehouse logistics operation, cross docking involves unloading the cargo and immediately transferring it to the outbound area with the shortest possible storage time. With this, you gain in operational speed, in addition to reducing dependence on warehouse space, which generates maintenance costs, labor, equipment use, among others. How does cross docking work? When the customer places an order, the seller sends a purchase request to the manufacturer/supplier, who, in turn, will send the goods to a warehouse closer to where the final delivery will take place. At the warehouse, the goods arrive, are checked, and shipped as quickly as possible. The item does not require storage because it has already been sold, and the faster it is shipped, the better it is for the customer. In practice, in cross docking, the logistics warehouse acts as a transit point, where products are received, checked, sorted based on the order and delivery route, and finally shipped. Instead of shelves, much of the space is occupied by entry and exit areas, conveyor belts, and forklifts to facilitate sorting and reloading. And the time the goods remain in this place is usually less than 24 hours. To allow optimal movement, the receiving and shipping docks are positioned on opposite sides. Types of cross docking There are basically three types of cross docking that can be adopted, ranging from the pure model to a hybrid format. Discover their peculiarities: 1) Continuous Movement It is the pure cross docking model, mainly adopted by e-commerce operations. Volumes are shipped from the supplier/producer to the distribution center or warehouse and shipped as quickly as possible to the final customer. With this, there are no permanent actions. 2) Consolidated or Hybrid Movement In this type of cross docking, the goods are received and sorted, part sent for shipping and part stored. 3) Distribution Movement The idea is to leave only the load closed for transport. Therefore, the goods are received and separated for distribution in FTL (Full Truck Load) loads for consumers. This mode is generally used by business to business (B2B). Generated Profit Cross-docking can be an interesting solution for many sectors, especially for e-commerce, which generally consists of companies that have little storage space and need to make deliveries agile. The advantage of this strategy is that it allows companies to increase their stock and, at the same time, reduce material handling and distribution costs. Additionally, companies can reduce the occurrence of losses and misplacements. Other advantages can also be mentioned, such as: • Reduction of the square footage required for the warehouse; • Reduction of costs related to stock storage; • Reduced material handling and consequent savings on labor costs associated with these activities (material handling is limited to loading, temporary storage, and unloading with minimal picking and depositing activities); • Reduction of the likelihood of stock damage, as handling is less; • Reduction of lead time (the period from order arrival to delivery to the customer); • Reduces the need for working capital, and the amount used to purchase products and store them can be allocated to other investments; • Transfer the aforementioned savings to customers, providing an additional competitive advantage related to cost. In short, we can say that price reduction + increased product quality + delivery agility = satisfied customer. The great advantage of cross docking is precisely the increase in customer satisfaction, helping the company to retain current consumers and conquer new markets. Should I implement cross docking in my company? This is a question you might ask yourself, after all, which manager doesn’t want more agility and space savings in their operations? But it is important to first evaluate some points and make the necessary changes so that the strategy generates the desired results. Once you decide to implement cross docking, it is crucial to evaluate in advance whether the warehouse facilities are capable of handling the operational change. In addition to understanding the dynamics, good monitoring, compliance, and auditing practices are necessary. This ensures that the process runs smoothly and is easy to monitor. To ensure product quality and inventory accuracy, an important recommendation is to have technologies that manage all inventory and allow for strict control, such as WMS, warehouse management software. This system should also be integrated with the company’s ERP and other systems (such as e-commerce platforms, in the case of e-commerce) so that there is a connection between information in the Purchasing, Warehouse, Sales, and Transport areas. Additionally, available resources, space, and automation tools should be evaluated. Another point to consider is business processes. In cross docking, you must rely on good suppliers, always available to meet your requests, otherwise, you can compromise. Team training is also crucial to ensure that all processes are carried out with maximum efficiency. Your employees must be well-versed in the process, and internal communication must occur without friction. And don’t forget to monitor your employees’ performance. Rely on indicators and apply Visual Management in your company. WMS can assist you with this. Another interesting tip is to rely on third-party services (logistics operators) so that your company has more than one CD to receive goods and perform cross docking. Therefore, it is important to analyze the location of suppliers/producers and their customers before defining a partner. Also, note if this partner has the structure to help you grow, being able to increase or decrease your operation with flexibility. And again: relying on the support of third parties who already operate in this mode can make it much simpler. If you are well-prepared, cross docking can bring great results! Cross docking: speed in delivery and cost reduction Deagor WMS per ecommerce può aiutarti!