Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or rail car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same, or similar destination.
Cross-Dock operations were first pioneered in the US trucking industry in the 1930's, and have been in continuous use in LTL (less than truckload) operations ever since. The US Military began utilizing cross-dock operations in the 1950's. Wal-Mart discovered the benefits of cross-docking in the retail sector in the late 1980's.
In the LTL trucking industry, cross-docking is done by moving cargo from one transport vehicle directly into another, with minimal or no warehousing. In retail practice, cross-docking operations may utilize staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship.
Advantages of Retail Cross-Docking
- Streamlines the supply chain from point of origin to point of sale
- Reduces handling costs, operating costs, and the storage of inventory
- Products get to the distributor and consequently to the customer faster
- Reduces, or eliminates warehousing costs
- May increase available retail sales space
- "Hub and spoke" arrangements, where materials are brought in to one central location and then sorted for delivery to a variety of destinations
- Consolidation arrangements, where a variety of smaller shipments are combined into one larger shipment for economy of transport
- Deconsolidation arrangements, where large shipments (e.g. railcar lots) are broken down into smaller lots for ease of delivery.
Retail cross-dock example: Using the cross-dock technique, Wal-Mart was able to effectively leverage their logistical volume into a core strategic competency.
- Wal Mart operates an extensive satellite network of distribution centers serviced by company owned trucks
- Wal Mart’s satellite network sends point of sale (POS) data directly to 4,000 vendors.
- Each register is directly connected to a satellite system sending sales information to Wal Mart’s headquarters and distribution centers.
Factors influencing the use of retail cross-docks
- cross-docking is dependent on continuous communication between suppliers, distribution centers, and all points of sale.
- Customer and supplier geography -- particularly when a single corporate customer has many multiple branches or using points
- Freight costs for the commodities being transported
- Cost of inventory in transit
- Complexity of loads
- Handling methods
- Logistics software integration between supplier(s), vendor, and shipper
- Tracking of inventory in transit