Cross Dock Operations

Cross-dock operations are one of the most crucial concepts in supply chain management, which reduces the supply chain’s overall cost while increasing the supply chain’s efficiency. It is typically useful in a scenario where a large quantity of material has to be shipped regularly to a customer/manufacturer from multiple suppliers.

What is a Cross-Dock?

A cross-dock is a regional warehouse that caters to suppliers from a particular region. The supplier, instead of sending the material directly to the customer, sends it to the cross-dock facility which in turn consolidates all items for the customer from multiple suppliers and dispatches the material on a periodic basis. The ‘milk run’ concept forms the basis for it. Typically, they store material on a temporary basis and move out the stock as soon as possible.

Types of Cross-Dock

Based on operational requirements, they can be classified into:

1. Manufacturer Cross-Dock : This is a dedicated facility and is operated by / on behalf of a Manufacturer. Material from different suppliers is consolidated to reach optimum/full truckload (FTL) and shipped to the manufacturer.
2. Distributor Cross-Dock : A distributor cross dock is a FG facility where material from multiple suppliers are consolidated and shipped to a customer
3. Transport / Logistic Cross-Docking: In this type, cargo of different carriers/logistic providers are consolidated in one truck and shipped. This is to ensure each shipment meets optimal truckload.

How does a Cross Dock Work?

Consider a scenario where a customer / manufacturer has a facility in Bangalore. The said customer has a large number of suppliers from say:

1. Delhi and Haryana in the north,
2. Kolkata in the east,
3. Gujarat and Maharashtra from the west and
4. Chennai and Bangalore from the south of India.

The following methodologies can be used for dispatching material:

1. Direct Dispatch
2. Cross dock

In direct receiving, all suppliers irrespective of their location and distance from the customer will have to ship the materials individually. Suppliers who supply in large volumes will not be affected much by direct shipping, although they will have to take care of logistics. Suppliers who do not have volumes will find direct shipment to be a very costly affair, and end up with less than truckload (LTL).

From the customers perspective logistics/material tracking will be a nightmare. The customer will have absolutely no idea about the status of shipment, what material has been shipped in what quantity and ETA. In addition, tracking multiple suppliers, having each supplier ship material directly will add a lot of overhead on the customer in terms of cost and labor. In addition, shortage, excess and incorrect document verification becomes a tedious job affecting the overall efficiency of the organization.

Receiving

All suppliers associated with the process will send material at a predefined time. The operation starts from the point of dispatching a truck to collect material from the suppliers. Number of trucks can vary based on the number of suppliers associated, as well as the quantity to be collected. The truck leaves at predefined intervals, goes to each supplier and picks up the material. Suppliers can also directly send their material to the cross-dock facility.

At the facility, the material is unloaded, received and binned. Based on predefined schedules, the material is loaded onto a truck with higher capacity and dispatched to the customer.

The customer has to track only a finite set of trucks. The customer will also know of any shortages and excess shipments and can correct the same at the facility itself, reducing the load and inaccuracies at the time of GRN.

Advantages of Cross-Dock Operations

When there is a large number of suppliers concentrated in a particular area, it delivers several benefits:

1. Reduced logistic management which translates into decrease in the cost of the overall supply chain
2. Shortages, Excesses and Damages can be identified and rectified at the facility itself reducing reverse logistics effort and avoiding inventory shortages
3. Finite number of trucks to be tracked by the customer
4. Clear idea of the transit stock and ETA at the customers facility

Conclusion

Cross-Dock implementation is useful in a scenario where multiple suppliers are concentrated in an area.  Suppliers near to the customer’s facility, suppliers spread across various regions and for customers having only small amount of suppliers direct shipment would be a better idea.

Decision on implementation should be based on tangible returns in turns of:

1. Efficiency
2. Supply Chain Cost
3. Cost of Operating
4. ROI

The PALMS Cross-Dock Module

PALMS provide built-in support to cross-dock operations:

1. Multiple Cross-Dock configuration
2. Supplier – Part – Cross-Dock – Customer Mapping
3. Route configuration with built-in support for multi routing
4. Three point validation of material and exception handling based on:
   Purchase Order vs Invoiced Quantity vs Material Received
5. Multiple invoices against a single Purchase Order
6. Dashboard and Notifications

Read more about our specialized module here.

References

https://www.tandfonline.com/doi/full/10.1080/09537280801916157?src=recsys

https://en.wikipedia.org/wiki/Cross-docking

https://publication.sipmm.edu.sg/effective-warehousing-inbound-outbound-operations-2/#Cross_Docking_Strategy