Our global ecosystem relies on the ability to transfer products from one location to another. While it sounds like a simple endeavor, businesses have a myriad of elements to factor into the logistics equation. And sometimes, business leaders don’t realize there are more efficient, timely, and cost-effective methods of transporting goods across the nation. Over the years, many companies have relied on traditional warehousing to stockpile merchandise so it's readily available should consumer demand rise.
However, there are more effective ways of moving products, such as cross-docking. Cross-docking offers substantial benefits when used in conjunction with a reputable third party logistics provider (3PL). From reducing costs to driving greater efficiency through the fulfillment process, here’s why cross-docking can be a truly advantageous strategy for modern businesses.
Cross-Docking vs. Warehousing
The traditional warehousing approach requires that a distributor has stocks of your products on hand to ship to customers. But cross-docking, in contrast, focuses on using technology and systems to create a just-in-time shipping process.
Cross-docking, sometimes also called transloading, moves product directly from receivables to outgoing shipping without long-term storage. In the LTL industry, cross-docking is done by moving cargo from one transport vehicle directly onto another, with minimal or no warehousing.
The Benefits of Cross-Docking
Decreased Overhead, Improved Bottom Line
One of the many benefits of cross-docking is the significant cost savings it provides. Why? Through the traditional warehousing model, a bulk of your business’s inventory will simply sit untouched for extended periods of time. In these circumstances, you’re essentially renting square footage from your logistics partner.
To decrease surplus storage costs, you can leverage cross-docking to effectively ship goods as soon as a customer places their order. Of course, warehousing in some nature will always be a necessary piece of your overarching supply chain strategy, especially for high-volume businesses where customer demand calls for bulk orders, and products that are needed immediately. But in a lot of cases, cross-docking can be a great substitution.
Unload. Reload. Rinse. Repeat. It’s a simple, yet effective formula for driving profitability. Through the utilization of cross-docking, you can rent the container and chassis by the day — effectively decreasing overhead costs. With a shortage of containers in the freight industry, particularly in the Midwest region, cross-docking offers a valuable solution for getting merchandise loaded up and shipped out, which is vital to ensuring a quick and seamless customer experience.
Streamline Your Network of Business Relationships
In contrast to warehousing, cross-docking allows businesses to build and nurture a strong relationship with a single entity in lieu of allocating time and funding across multiple distributors. With one centralized source for your cross-docking needs, you’re swapping an often complex and chaotic network for a streamlined partnership with one provider, helping create a scalable and sustainable business model.
Cross-Docking Decreases Risk
Let’s face it: if shipping is involved, there are risks associated with it. That’s business. While risk is a natural reality of engaging in shipping operations, the risk can be greatly reduced through the implementation of a cross-docking strategy. At first glance, this may seem illogical. After all, if cross-docking is a quick means of shipping out products, it must leave you more vulnerable to risk, right? In fact, it’s the very opposite!
Cross-docking is an effective way to lower the likelihood of goods being damaged. And here’s why: you’re eliminating two key facets of the shipping process: moving goods into storage, and moving them out of storage. Kicking these two steps to the proverbial curb reduces the number of hands that ultimately interact with and touch the product, decreasing the risk of human error.
Cross-Docking Offers a Speedier Process
Today’s consumers want their products delivered quickly and hassle-free. With the rise of Amazon and similar services, consumers now expect this level of on-demand service after placing an order. Traditional warehousing can elongate the process of transporting goods to a customer’s doorstep. Through cross-docking, as soon as an item is ordered, it can be dispatched for delivery. This equates to a speedier arrival time for consumers, leading to increased satisfaction, loyalty, and retention, as well as a stronger overall customer experience.
What’s more, the cross-docking process (compared to warehousing) frees up valuable time for businesses, allowing them to reallocate resources towards more high-level initiatives. The shipping process can be time-consuming, but when expedited, freed-up time can be spent on driving revenue, launching new products, or tapping into new markets.
Cross-docking is a service that Smart Warehousing is proud to offer, and we understand its many benefits. We’re constantly looking to move the needle forward on innovation and efficiency to deliver better, easier solutions across the entire supply chain, including shipping.
Types of Cross-Docking, Explained
Cross-docking doesn’t encompass one specific form of shipping. There are several different methods that a business can leverage, including the following.
Manufacturing cross-docking is the act of receiving purchased and inbound products that manufacturing requires. In this case, a warehouse may prepare sub-assemblies for the products they’ve received for the orders.
Under this umbrella, the process consolidates inbound products from various vendors into a mixed product pallet. This pallet is then delivered to the customer when the final item is received. What this means is that items from a variety of different distributors can be brought into one shipment to a consumer, as opposed to them receiving a bunch of different orders.
This practice combines shipments from various LTL structure transporters or joins products into small bundles to deliver monetary benefits of scale.
Retail cross-docking was first utilized by Walmart in the 1980s. Retail cross-docking refers to the act of receiving products from numerous unique vendors and subsequently sorting them onto trucks to be delivered to their end destination.
The good thing about opportunistic cross-docking is that it can be used in any warehouse. It’s a versatile type of cross-docking that transfers a product directly from the receiving dock to an outbound shipping dock in order to satisfy a customer’s sales order.
What Products Are Best For Cross-Docking?
While the many benefits of cross-docking are irrefutable, not every product is suitable for leveraging this method of transporting goods. The kinds of items that benefit the most from cross-docking include:
- Perishable items that require immediate shipping
- Items that are high-quality and do not require inspection during the receipt of goods
- Products that have previously been pre-tagged, pre-ticketed, and ready for sale, including RFID and barcodes
- Promotional items that are ready to be launched
- Retail items that are either in a constant demand or are in a low-demand category
- Items that come pre-packaged from another production plant or warehouse
Are There Risks Associated with Cross-Docking?
The reality is, there are risks associated with adopting any process. And cross-docking is no different. The risks that come along with cross-docking could involve the risk of losing a product during the hands that pass it along during the process.
In order to avoid these kinds of risks, a robust inventory control system should be put in place by warehouse and supply chain managers. These managers should train employees effectively in order to avoid any vulnerabilities during the cross-docking process. It’s important to implement these practices to build up your company’s reputation, and ultimately increase your bottom line.
The Smart Warehousing Way
Smart Warehousing has over 30 different warehouses in 12 different key markets across the US. As a technology-driven 3PL provider, we provide a one-stop-shop for all your supply chain needs — from packing and fulfillment to storage and shipping.
To ensure your business maintains a competitive presence and increases revenue, contact the specialists at Smart Warehousing today to see how we can build a customized solution to align with your unique business goals.