Cross-docking is an approach to supply chain management that, for all intents and purposes, removes the warehouse from the equation. A common example of cross-docking occurs when freight from inbound trucks is hauled across the shipping dock before being loaded onto departing trucks directly, without ever entering the warehouse.
While this reflects a more basic example of cross-docking, the reality is that it’s a considerably more complicated supply strategy than it initially presents. Outbound trucks often face unexpected delays under this tactic, which means some degree of short-term storage is usually required for any supply chain model that relies heavily upon cross-docking.
Why do companies use cross-docking?
Cross-docking as a supply chain strategy fundamentally seeks to reduce warehouse storage and handling requirements while cutting labor overhead and increasing fulfillment speeds. Cross-docking is frequently associated with just-in-time delivery approaches to warehousing. The primary objective behind implementing the strategy is to cut costs while enhancing operational efficiency at the same time.
While cross-docking seems simple on its surface, it’s often difficult to arrange from a logistical standpoint. Cross-docking requires constant updating to keep up with shifting demands. Moreover, the lack of long-term storage solutions means that this strategy provides little room for errors, delays, or unanticipated disruptions.
As a practice, cross-docking isn’t ideal for all product types. Low-volume items in low demand scarcely make sense for the cross-docking approach. The strategy can, however, benefit most high-volume, specialized supply chains operating within a larger network to keep businesses more competitive by cutting operating costs while increasing productivity and customer satisfaction.
The different types of cross-docking
The cross-docking strategy adheres to one of two distinct approaches. The first method consists of a single channel point-to-point solution most commonly deployed when freight transfers from one form of transportation to another. Moving pallets from a train car to a truck or a cargo container is one obvious example of this type of cross-docking.
The most common cross-docking strategy is the hub-and-spoke approach that which is not unlike the system used across most U.S. airports. Under this method, when long-distance freight arrives at a central location, the large load is divided into smaller lots as it’s offloaded.
Once the lots are separated, they’re transported across the loading dock to smaller cargo vehicles nearby. This, of course, closely resembles the way passengers disembark large aircraft and transfer to smaller planes on the tarmac that serve regional and municipal airports.
The cross-docking approach to supply chain management can be further broken down into the following categories:
- Load Unit Level – In this cross-docking strategy, pallets are moved undivided and intact from one mode of transportation to another. The products remain intact, and there is essentially no handling of the products at the facility at all. The items are moved from one cargo vehicle to another as a fast and efficient solution with little overhead.
- Case Level – Under case level cross-docking, goods are initially transported in cases or individual cartons. Larger inbound freight arrives on pallets before its offloaded and broken up into smaller boxes. These packages are then shipped out as separate parcels. The redistribution is established and tracked by the stock-keeping unit (SKU) on the packages.
- Mixed Case Level – This approach to cross-docking is the most resource-intensive and requires more specialized equipment. Inbound pallet freight is not transferred intact, nor is it broken up into smaller loads. The cargo is, instead, unpacked and sorted before being redistributed onto new pallets for shipment to the final destination.
Cross-docking typically entails the use of all three approaches to some degree. Most companies use multiple methodologies for cross-docking at the same facility, and the challenge is managing different load sizes accurately without making unnecessary mistakes.
How RFID technology enhances cross-docking
Lean supply chain management was popularized in the late eighties and nineties as computerized tracking made this option more feasible. Similarly, cross-docking and other just-in-time approaches to shipping wouldn’t be possible without advanced technological solutions.
The ability to manage diverse products across various global supply chain channels fundamentally enables modern cross-docking strategies. Yet withal, even with recent advancements in computer technology, missed connections and other errors still commonly occur.
One solution many distribution companies have been turning to is Radio Frequency Identification Technology (RFID). RFID chips transmit a specific identification code to isolate and identify specific goods when a signal supplies them with power. The code communicates itself remotely, and when users link the information to a database, they can easily track and record the movement of their goods.
RFID chips are most cost-effective when integrated into shipping platforms like pallets, making cross-docking one of the easiest and most efficient solutions for warehouse-free distribution. The chips remain in place over the lifetime of the pallet, however, which means most companies that use RFID tech opt for reusable plastic pallets instead of those made with flimsy wood materials.
The RFID chips are embedded into the plastic pallets for load unit-level tracking through computerized remote readability. The ability to track each individual pallet from any connected location ensures greater transparency and more control over your entire supply chain. When you increase traceability, you reduce the chances of missed connections and lost cargo.
RFID solutions with WiSys
We specialize in SAP Business One for small companies by helping them obtain more productivity from their warehouses and automated processes. To learn more about how RFID technology can improve your cross-docking supply chain strategy, give our team a call at 770-955-3550 today.