Today’s customer-driven economy has transformed the logistics industry. To compete effectively, suppliers are recognizing they must do business their customer’s way— finding methods to move products more quickly, efficiently and cost effectively. Speed and agility are the name of the game. As companies focus on cutting costs from their supply chain, they must make sure that shelves are stocked with the right product to meet demand in a marketplace where customers’ demands change every day. To achieve these goals, more and more companies are finding that cross-docking must play an integral part of their distribution model.

To gain a better understanding of cross-docking practices, issues, and challenges, Saddle Creek Corporation (www.saddlecrk.com) commissioned an independent party to survey industry professionals who are responsible for and involved in warehousing, distribution and/ or transportation. A total of 547 surveys were completed in February 2008, making this research statistically valid. Of these respondents, 52% currently cross-dock, 13% do not cross-dock now but plan to cross-dock in the next 18 to 24 months, and 31% have no plans to cross-dock.

Of those who have implemented crossdocking, 28% are veterans, having crossdocked for more than 10 years. Another 30% have been cross-docking for four to 10 years. However, the practice is still drawing new practitioners, as 32% of those who cross-dock have been operating a cross-dock for just one to three years. Many respondents plan to expand their cross-docking efforts. About half of those who currently cross-dock have considered cross-docking more of their total SKU throughput. This combination of new and established cross-docking practitioners helps to confirm the growing role of crossdocking in the industry.

Cross-Docking: A Snapshot

Cross-docking is defined as the process of receiving product and shipping it out the same day or overnight without putting it into storage. Cross-docks are generally used for “hub-and-spoke” arrangements, consolidation, or deconsolidation. Typically, cross-docks can be developed using a variety of strategies such as (but not limited to) the following arrangements:

• Either pre-picked to a customer order or bulk-picked to a pooling location to handle the “last-mile” shipment to the customer.
• Pre-picked orders to a less-than-truckload (LTL) carrier break-bulk facility from where the LTL carrier’s network is used.
• Pre-picked orders transferred to LTL through the use of a third-party warehouse facility to handle the cross-docking process.
• From multiple plants (deconsolidated) into a third-party cross-dock that, within hours, picks and consolidates all products from all plants into customer or route orders and then delivers.
• Consolidating LTL into truckload which reduces the number of deliveries to retail outlets.

In keeping with the product-in/product- out nature of cross-docking, 66% of respondents report that products reside at their cross-docking facility for one day or less. For 29% of these respondents, products reside at their cross-docking facility for half a day or less.

Cross-docks generally can be divided into three levels of complexity:

• One-touch – Products are touched only once, as they are received and loaded outbound without being placed on the warehouse dock. This is highest velocity ”load-as-you-go” and the focus is on crossdock productivity.
• Two-touch – Products are received and staged on the dock then loaded outbound without being put into storage. The focus is on outbound load optimization and gaining transportation efficiencies.
• Multiple-touch – Products are received and staged on the dock, then reconfigured for shipment and loaded outbound directly from the warehouse dock. This method offers the greatest opportunity for customization and end-user value-add.

Customized programs that involve multiple touches are able to achieve the greatest efficiencies when products are handled the least, as reflected by the velocity with which respondents’ products flow through their cross-dock facilities.

Shipping practices

On average, respondents who currently cross-dock report that approximately 27% of their throughput (both inbound and outbound) volume is cross-docked. Those who plan to cross-dock expect a somewhat lower average (19%), probably wanting to start cautiously. Saddle Creek’s research shows that two-thirds of respondents cross-dock more than 10% of their throughput (both inbound and outbound) volume, providing further evidence that cross-docking is on the rise significantly.