Cross Docking Efficiency Improvements in Four Places

Sellers can extend their cross docking efficiency capabilities by incorporating innovative shipment alerts, barcodes, warehouse management systems and material handling systems in a more holistic way.

Cross Docking Efficiency Summary

Cross docking an easy warehousing practice, is the procedure of moving product from the receiving dock to the shipping dock and bypassing intermediate storage. Yet it is core to a highly working supply chain, in addition to a critical element for merchants pursuing a circulation technique that pivots on lean concepts and fuels in the nick of time (JIT) stock control. It requires a tight partnership among supply chain members. The benefits of cross docking have actually been well recorded, and it’s safe to state that it has actually been welcomed by sellers of all kinds. By moving products through distribution centers (DCs) with very little storage, companies that efficiently utilize cross-docking have been able to increase stock turns, enhance throughput and lower functional costs The 2011 Cross Docking Trends Report by Saddle Creek Logistics Providers suggests that making use of cross docking has grown substantially for many years, from 16.5% of the 219 sellers surveyed in 2008 to 68.5% in 2011.

Cross Docking Efficiency Improvements in Four Major Places

Still, difficulties continue for sellers attempting to execute a best cross-docking procedure amidst difficult economic times.

These concerns, consisting of labor costs, accuracy and throughput relate to:

  • IT System Assistance
  • Supplier Reliability
  • Attaining ROI

This paper discovers inefficiencies in cross docking, and explores opportunities for increasing effectiveness through actionable procedure enhancements and technology-based options.

We will likewise talk about the best ways to properly position cross-docking techniques in the supply chain, and information the areas where merchants have to hone their focus, including:

  • Advanced Shipment Alerts (ASNs)
  • Logistical Unit Barcodes
  • The warehouse management system (WMS)
  • The material managing system (MHS)

Cross Docking Efficiency: Key Focus Locations

To enhance cross docking efficiency, retailers and providers need to build or extend abilities in the following four areas:

ASN (Advanced system alert): ASN is among the conclusive “finest practices” of an incorporated supply chain and a foundation of automated retail warehouse management processes. The ASN tells the retailer when an order will be shipped, what products are being delivered and just how much of each item is being delivered, in addition to provider details. Significantly, this important details is sent digitally by the provider by means of electronic information interchange (EDI), e-mail or other channels in advance of the merchant receiving the goods. This allows the merchant to automate the receiving procedure in the distribution center inning accordance with the ASNs sent by the supplier.

Our company believe that retail companies, even industry leaders, face barriers in implementing a clean and precise ASN business process. This can have significant financial and functional effect on both the retailer and the provider. Among our suggestions and observations:

ASN Precision Is Very Important To Cross Docking Efficiency

In a blind receiving environment, a considerable quantity of hidden differences exists in between the physical product received and the ASN. This has a massive effect on inventory, billings, the accuracy of reorders, sales and, of course, customer care. It affects both the seller and the provider. Fulfilling the ASN precision targets of 100% is essential, but has been an overwhelming task for suppliers.

Given that merchants acknowledge the value of ASNs, we advise that they dedicate resources and efforts to pursuing the following three-step process for enhancing suppliers’ ASN efficiency:

Work together with suppliers: For an ASN business process to succeed, it’s essential that supply chain partners develop close relationships and work as a group. The inability to develop a good working relationship can cause failure in an ASN venture. Sharing warehousing and circulation procedures, clear interaction and self-confidence in quality are a few of the attributes that form an effective ASN procedure. Merchants should meet their providers and make certain they understand the importance of prompt and accurate ASN information in relation to their future business relationship.

Define ASN errors: Sellers have to improve and plainly define “ASN cautions and mistakes.” It is very important for business to identify the reason for data mistakes and remove the issue. If a seller can process the ASN however wants to notify the provider about the ASN deal, the retailer’s systems must send out a “caution” message back to the supplier’s system. An example of a warning would be if a provider includes a product in the ASN that was not on the P.O. If there is a mistake (i.e., a failure to find the item or the P.O. number sent in the ASN within the seller’s systems), then the ASN must be turned down. Suppliers’ systems should have the ability to send replacement ASNs and merchants’ systems should have the capability to re-process the ASNs.

Remedial action to close the loop: We advise merchants to establish a formal audit process to integrate the following three requirements as they apply to the ideal ASN timely, total, and error-free.

More particularly, to assist suppliers in handling their ASN compliance, merchants need to offer a prompt ASN compliance report to suppliers. This must include a big picture of providers’ ASN efficiency (missing ASNs, quantity disparity, ill-timed ASNs, ASN mistakes, for example). Utilizing this reporting option, providers can make sure ASN transactional stability and avoid hold-ups in moving product through merchants’ distribution network. Retailers need to implement the best processes (chargebacks, addition in supplier scorecards, direct discussions, supplier training, and so on) to create a closed loop system. These actions can have a huge impact on ASN accuracy in time.

Take full advantage of supplier involvement: A study by Gibson and Williams, ASNs in Retail Benchmark Report 2011, exposes that 78% of 100 retail respondents receive ASNs however only 30% of merchants receive ASNs from 100% of suppliers.

Retailers can make the most of cross docking efficiency by enabling 100% of their suppliers to start prompt, complete and precise ASNs.

More visibility into inbound shipments offers sellers unequaled benefits, consisting of the ability to cross-dock merchandise, lower distribution center expenses and improve order cycle times. The benefits to the supplier are also substantial: faster and more timely circulation of goods through the supply chain, and more accurate billings, which lead to more accurate payments.

The inability to establish an excellent working relationship can lead to failure in an ASN endeavor.

The Present State of ASN, Barcodes and Sorters

The Current State of ASN, Barcodes and Sorters

Figure 1 highlights the adoption of ASN, barcodes and automated sorting systems by suppliers and retailers.

Barcodes: There are many needs to use barcoded labels on containers, but the most compelling is for moving items through the process of shipping and receiving in the merchant’s distribution center. Throughout the supply chain, trading partners are leveraging the power of barcoded labels using GS1 requirements as the basis of their company procedures.

Utilizing an incorporated GS1-128 barcoded label and ASNs, together with a proven warehouse management method, companies can enhance supply chain efficiency. Merely stated, the GS1-128 number links every logistical unit back to the purchase order for the products in the logistical system. To implement the ASN at the carton level, the GS1-128 barcode label should be printed and applied to each container, and the info communicated in the ASN. The ASNs, together with the barcoded containers in a GS1-128 standard, can drive crucial supply chain and logistics benefits, consisting of precise and prompt receiving in the merchant’s distribution centers, increased productivity and accuracy, and lower labor costs.

Our company believes the following tactical moves can assist providers navigate the challenge of increasing labeling and automation complexity.

Follow barcode requirements: Global requirements enable tighter systems integration; improve procedures by supporting automation; help in reducing expenses; get rid of mistakes; attenuate the risk of system incompatibility; safeguard technology investments; allow the optimization of supply chain management practices, and remove supply chain barriers.

Recognize the benefit to trading partners: It is a common mistaken belief among suppliers that the addition of the ASN and GS1-128 label will just be of advantage to trading partners, at an additional expense to the supplier’s organization. Our company believe that sellers and suppliers need to implement the ASN and GS1-128 labels to achieve the following advantages for suppliers:. Track and verify shipping procedures Help ensure timely delivery of shipments and Enhance the payment process.

Warehouse Management System( WMS): ASNs must be owned by a concrete business procedure inside the warehouse. Sellers should not start a full-blown ASN effort up until they have equipped their warehouse to automate receiving and details reconciling processes. There is little worth in having suppliers carry out the ASN when the info can not be made use of at the distribution center and downstream supply chain. It is critical to speed the circulation of goods through the warehouse. Given that receiving is one of the most labor-intensive, low-value, processes in the distribution center, it makes good sense to take any opportunity to make it as effective as possible. Inning accordance with a recent study performed by the Grocery Manufacturers of America (GMA), ASNs can speed up the shipment process and slash receiving time by as much as 60%This can represent a savings of 65,000 receiving hours annually for a 250-store, large-format chain if simply one-quarter of its shipments are preceded by ASNs. International logistic workers can minimize the time and cost of incoming processing by helping their providers in sending out precise ASNs and goods with barcodes. Radio frequency(RF) based and automated ASN receiving are more accurate and efficient than manual cross-docking, and should be extensively practiced by retailers.

Cross Docking Efficiency Key Benefits of ASN and Barcodes

Simply receiving goods with barcoding and ASN info is just half the battle. Our company believes that merchants would be smart to embrace the following strategies to build an improved cross docking process to drive more effectiveness in warehousing.

ASN accuracy and quality: ASN accuracy requires a focused effort. Sellers need to dig into the data to understand the source of problems and take suitable actions to improve precision. Sellers’ systems should instantly confirm ASNs for accuracy against predefined organisation rules, making it possible for mistakes to be identified and fixed with very little manual effort before they infest the WMS and delay shipment to clients. The ASNs in the Retail Criteria Report 2011 points to “prevalent contract concerning accuracy standards.” In fact, the report mentions that near-perfection is the goal for 60% of the merchants that think a mistake rate greater than 1% is unacceptable. An additional 38% suggested that “an error rate greater than 2% is intolerable.”

Thus, retailers must regularly investigate ASNs and include suppliers in the effort to accomplish 99% ASN precision.

Pre-receiving based upon the ASN: Poor provider scheduling can produce insufficient labor allocation, ineffective loading/unloading and avoidable preparations. In the present supply chain environment, the inbound appointment scheduling process is either handbook or semi-automated, with appointment schedulers. The WMS, upon receipt of the ASN, need to automatically use the info to arrange visits for providers to provide the items, and schedule the labor and equipment needed to discharge and process deliveries. By carrying out an automated appointment-scheduling system, a merchant’s ROI can be significantly minimized the typical payroll expense of $22,000 for a warehouse partner.

Automated consultations also minimize the amount of time had to set up visits at the DC. Based upon our experience in automating the appointment-scheduling procedure for merchants, a DC scheduling 200 visits daily can save an average of 23 hours weekly, assuming that typically it takes one minute to develop an appointment.

Building containers with RF-based cross dock receiving can be accomplished through barcode scanning. Sellers ought to develop a receiving process in their warehouse using an ASN with barcode information to prepare for goods invoice. Upon arrival of the goods, the merchant can then scan the barcodes on the multi PO/SKU containers, enabling the system to compare the contents with the ASN to verify precision. Labels need to not be printed at warehouse with the receipt of private cartons; rather, DCs must build the capability to consolidate merchandise with receiving, rather than building the containers after receiving, which requires an extra scan of the containers. These printed generic container labels assist in combining the containers received at the DC.

The generic label does not consist of item, quantity or location information. As soon as containers are added to a generic container during receiving, any movement of that container through the system will move all associated containers. The consolidation of containers will get rid of the have to scan a carton again after receiving it to load into an outgoing delivery. This will also remove the have to print and use a carton label with barcode to move the merchandise from receiving dock to shipping dock.

Based upon our experience in implementing an RF-based cross dock receiving and container building procedure with receiving, the operational expense savings can reach $2.1 million a year, while the cost of labels can be reduced by $0.29 million a year. Resulting in a total of $2.39 million in cost savings each year for a distribution center scheduling 200 consultations daily with 1000 containers in a consultation.

Conduct routine audits to compare the ASN information to the actual delivery, and compare exactly what was bought to exactly what was shipped. Quantity overage, scarcity and item mismatch are the most typical delivery mistakes. Retailers need to discover services to concerns found throughout the audit to ensure that providers’ ASNs are precise and prompt. Reliable audit alternatives include targeting issue providers, along with brand-new providers, for regular audits.

ROI Level of Maturity and Cross Docking ROI High

ROI Level of Maturity and Cross Docking Efficiency ROI

Figure 3 (see next page) highlights the ROI with the level of maturity in cross-docking efficiency processes.

Product Handling Systems (MHS): Automated material managing systems are essential to a cross-docking operation. The conveyor system plays a crucial function in getting product in and out of the DC rapidly. Distribution centers should integrate the warehouse management system and automated conveyor systems to carry out automated receiving in order to enhance effectiveness and cut expenses. As the cross dock product gets to the warehouse, the freight must be straight unloaded to the conveyor. As the cartons are thrown on the conveyors, barcode scanners should have the capability to read their barcode labels.

These consist of supplier, P.O., in addition to item and destination-specific details for receiving cartons and diverting them to the right lane for consolidation and shipping.

The receiving process in a common distribution center involves workers scanning the containers to carry out receiving, print and use a routing label, and scan to pack the cartons on the conveyor. We believe that sellers need to implement the following methods to plan and design a fast, versatile, precise, automatic cross docking procedure.

Conveyor-based receiving and sorting involves cross docking efficiency sorting systems, which are ideal for zero-inventory DCs. Automated receiving conveyors can considerably lower operating expenses, increase throughput and improve the whole circulation procedure. Containers are thrown on the conveyors; their barcode labels read by repaired readers on automated conveyors systems to receive the freight into the warehouse.

This new procedure increases labor efficiency by eliminating the time to manually scan containers. Based on our experience in carrying out conveyor-based receiving, the operational cost savings can be $3.14 million a year for a DC scheduling 200 visits daily with 1000 cartons in an appointment.

Label-free receiving gets rid of the have to print and apply a new routing label on the containers received. Lowering the expense of printing labels and by hand using labels to each carton. Based upon our experience in executing conveyor-based receiving, a warehouse scheduling 200 appointments daily with 1000 containers in a consultation can save $0.29 million a year in labeling, resulting in an overall of $3.43 million in savings each year.

Automated conveyor-based receiving reduces touches by moving containers directly from the incoming truck to the automated conveyor systems, reducing processing expenses.

An automated cross docking efficiency system based upon automated sorting can result in a number of advantages: less manual work; store-friendly delivery (which makes it much easier and more efficient to fill shop shelves); lower expenses from eliminating the have to print carton-level labels; and significantly higher accuracy. Moreover, 100% proper deliveries are ensured and the supply chain is made visible by integrated tracking and tracing.

Cross Docking Efficiency – Looking Ahead

Alleviating the obstacles of item warehousing and distribution is an essential benefit of incorporating the ASNs, barcodes, WMS and MHS systems. In today’s distribution centers, ineffectiveness abound relating to labor, accuracy and throughput.

Integrating systems can supply an effective treatment for each of these important areas:

Labor expense: Reduce the amount of labor and time required to complete inbound freight processing. Over 30% of labor is bound in receiving. Decreasing touches in receiving is a big win. By carrying out the procedure explained in this paper, our clients have actually had the ability to decrease their labor expenditures by as much as 65%.

Precision: Minimize the need to check, audit or validate that the proper product and quantity is received. Therefore, sellers with difficult receiving environments that consist of several suppliers with numerous PO/SKU containers must invest a significant amount of time on ASN audits to achieve 99% accuracy. With the procedure defined in this paper, we presume a near 100% accuracy is possible.

Throughput: Improve throughput to decrease order turn-around time and assistance on-time shipment. Merchants need to use ASNs, barcoded freight and automated sorting systems to expedite the receiving process in their DCs. By implementing the process discussed in this paper, our customers have been able to increase throughput by 2.9 times when compared with the traditional cross dock receiving procedure.

It has actually been said that the very best warehousing is no warehousing at all. While that sentiment is impractical, cross docking efficiency in the fashion of integrated ASNs, barcodes, WMSs and MHSs can provide an acceptable alternative to the utopian vision. When correctly performed and kept track of, it can function as a tool for synchronizing the supply chain and producing substantial area, labor and inventory savings.

Cross Docking Efficiency Article References

Saddle Creek Corporation, “2011 Cross Docking Trends Report” June 2011

Aberdeen Group, “Warehouse Operations: Increase Responsiveness through Automation,” July 2009

Willard Bishop, Grocery Manufacturers of America, “Optimizing The Value Of Integrated DSD,” 2011

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