Cross-docking A Supply Chain Savings Strategy

Cross-docking As A Supply Chain Savings StrategyBy decreasing reliance on inventory buffers and accelerating customer orders, cross-docking promotes a flow-through supply-chain pipeline. Cross-docking as a distribution technique is not new. Nevertheless, its usage continues to grow with the popularity of just-in-time (JIT) methods, and as supply chain ideas such as collaboration take hold, and sophisticated information technologies continue to proliferate.

Cross-docking is primarily a warehousing practice, but in order for it to be efficient and effective, there has to be close coordination and constant, premium info flow between producer, distributor, and client levels.

Exactly What Is Cross-Docking?

A broad meaning of cross-docking is the transfer of items and materials from an incoming provider to an outbound carrier, without goods or products actually getting in the warehouse or being put away into storage. Hence, the items “cross the docks” from the receiving dock location to the shipping dock location. The reality is a bit more complicated than this broad definition, given that there are several variations of cross docking, as explained in the accompanying box, “Typical Types of Cross-docking.” And it is clear that the shipper, generally the producer, brings a high degree of responsibility for making cross docking at its customer (supplier) facilities effective.

Cross-docking can provide substantial inventory cost savings. In its absolute purest form, there is no storage. For that reason, there is no routing to storage areas, no subsequent retrieval from storage racks, and no rerouting back to dock areas. Both the costs of holding inventory and the costs of handling the inventory are removed or at the very least drastically minimized. In addition, cross-docking supplies enhanced customer support by speeding up client shipments.

Owens Corning’s Cross-Docking Technique

Cross-docking Supply Chain StrategyThe majority of warehouses can cross dock a very small amount of their incoming materials. Owens Corning, based in Toledo, OH, reports a range from a small portion of 40 percent up to HALF, depending on the location. This goes for “opportunistic” cross-docking, as well as direct loading of outbound deliveries from the production line. Opportunistic cross-docking takes “hot” products such as back ordered or late-arriving goods and moves them straight to outgoing shipping locations instead of moving them initially to storage and put away. Even if some of the needed goods remain in stock, cross-docking of the incoming items is carried out to save time and expedite orders. Sometimes the “hot” items are combined with items coming straight off the assembly line to make up outbound orders. In accordance with Logistics Systems Development Group Leader Barry Burnham, cross docking at Owens Corning occurs primarily at multi-purpose storage facilities co-located with the business’s production facilities. They serve retail, wholesale facilities, and other distribution storage facilities.

The company moves big, large materials such as fiberglass insulation, pallets of glass reinforcements, and vinyl siding. The performance of material movement is a significant concern. By reducing the number of “touches” applied to materials, the business has actually experienced significant reductions in labor, product damage, and cycle time.

Cross-docking is carried out solely for palletized or otherwise unitized loads. Turns for many cross-docked items typical 25 to 50 annually.

Cross-docking is not applied to products coming off the assembly line that have treating or quality testing requirements.

Translation of the Acronyms

Cross-docking is a crucial element in a synchronized supply chain. In turn, supply chain management today relies on the use of different information technologies and strategies whose acronyms have actually ended up being an “alphabet soup.”

Quick descriptions of the acronyms are provided:

ASN – Advance Ship Notice. An electronic alert that an item is due, prior to it is received.

ERP – Business Resources Planning

LTL – Less-Than-Truckload amount for shipment

OMS – Order Management System

A cross between preparation and execution software application. OMS carries out order entry, stock management, order processing, and customer support. It prepares the shipping and shipment execution program, which is then moved to a warehouse management system.

POS – Point Of Sale

RFDC – Radio Frequency Data Connection

SCM – Supply Chain Management

The procedure of enhancing the flow of materials and products from the provider’s provider to the consumer’s consumer.

TMS – Transport Management System

An execution software system that plans freight motion, manages freight ranking, picks the path and carrier, and manages freight costs and payments.

VMI – Vendor Managed Inventory

A process in which the supplier presumes obligation for replenishing the customer’s stock as needed.

WMS – Warehouse Management System

An execution system that handles the operations or a warehouse or distribution center, consisting of receiving, cross docking, putaway, inventory control, order selecting, replenishment, packing, and shipping.

YMS – Yard Management System

An execution system that handles lawn operations, consisting of invoice of carriers, dock scheduling and identifying, and operator activities relating to receiving and shipping. Extremely small inventories is the key element that links the supply and demand sides of the supply chain.

Market forces are continually increasing pressure on supply chain management (SCM) performance, with requirements for increased throughput with lower inventories, more product lines with lower operational expenses, and more value-added services supplied to clients. In the past, the traditional SCM model depended on using stock buffers at tactical points within the supply chain to ease the unpredictability in between supply and actual need. Note that in this example the supply and demand chains are decoupled, and inventory buffers are used to offer a connecting link.

Today, however, the objective is to integrate the supply and demand chains to offer flow-through operation made possible by crossdocking. In this model, the chains are coupled, and cross-docking replaces inventory buffering as the linking system.

Without a doubt supply-chain reliability is crucial when running with minimal stock buffers. (If a product does not get here from the provider on time, there is very little contingency in the stock buffers.) Therefore, information sharing is essential. The simplest labeling scenario is when you have stretch-wrapped pallet loads that travel undamaged to the ultimate location. Considering that each case in the load does not have to be identified, only the pallet needs recognition, and on 2 faces if possible.

On the other hand, incoming pallet loads that need to be broken down will need labeling of specific cases or products, and the number of pieces to each consignee to be identified. Cross docking ends up being more complicated when less-than-full-case circumstances are involved. Unloading, choosing, packing, and labeling certainly is a lot more time-consuming. Some distributors pick not to cross-dock less-than-full-case shipments.

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