From SCDigest's On-Target E-Magazine
June 1 , 2011
Logistics News: Interest in Crossdocking is High, but Challenges are Many
Potential and Current Users Cite Many IT System Limitations as Key Barriers; Spirits Distributor Uses Dismountable Containers for Route Deliveries to Eliminate Local DCs
SCDigest Editorial Staff
As the next logical step to reduce logistics costs, many companies are interested in crossdocking, which at a high level refers to some practice that involves moving inbound goods to shipping without putting them away first. (See also Getting Cross Dock DC Design Right.)
That was certainly apparent at the recent Warehouse Education and Research Council (WERC) annual conference in Orlando, where two of the popular round table sessions were devoted to crossdocking, with both sessions "sold out" in terms of pre-registration.
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"Many if not most manufacturers/distributors can do crossdocking for backorders, but doing crossdocking opportunistically presents many challenges."
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What Do You Say?
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Moderator Mike DelBovo, a senior vice president of 3PL Saddle Creek Corp., started off by offering a rather expansive definition of crossdocking that included many DC processes, such as "merge-in-transit" and other crossdock-like tactics, into the crossdocking bucket. (Saddle Creek has sponsored research on crossdocking in the past, including a new report earlier this year based survey data relative to crossdock practices.)
There has always been a ceertain confusion in the industry as to how crossdocking is defined. A prime example is in the retail sector, the area where by far more crossdocking is performed than any other industry (with the exception of the less-than-truck-load (LTL) transportation sector, where the entire business model is based on crossdocking at freight terminals, but that is very different than most applications).
In retail, some observers will use the terms crossdocking and "flow through distribution" almost interchangeably, but most retailers see a difference. Crossdocked product is when product is moved directly from inbound receiving to outbound doors with no other processing - one touch. Flow through product, on the other hand, will undergo some processing first, such as price ticketing or store-specific distribution, which may delay shipment of that merchandise for as long as a day or two, but the product is nevertheless sent on to the stores without being first put away.
Department store chain Stage Stores provides a good example. The parent of banners such as Peebles and Palais Royal in addition to nameplate Stage Stores chain, the retailer operates smaller size stores in smaller towns, meaning it doesn't usually have enough goods going to a store to justify a full truck load for each delivery.
Instead, it has a contract carrier operating in each region that delivers to the stores in a multi-stop truckload. Because Stage Stores has negotiated a deal in which the carrier gets a fixed fee per carton or tote regardless of its size, it has an incentive to maximize the amount of goods that go in each store carton.
So, as inbound shipments are received, associates and the WMS system will determine if the goods can be directly crossdocked, either because the inbound carton is sufficiently large as it is or because the goods are needed immediately at the store.
In other cases, the cartons are moved internally for further processing, such as picking items from full cases for individual stores (using any of several automation methods, such as tilt tray sorters and garment on hanger conveyor), or even repacking a smaller carton already packed by the vendor for a specific store into a larger carton/tote with other merchandise going to that same store to save on freight costs. Stage Stores considers this "flow through" product which does involve more handling versus crossdock product, but again the key is it is never put away.
Crossdocking More of a Challenge for Non-Retailers
Crossdocking and flow through in general are much easier for retailers than manufacturers or distributors, because for a given period of time a outbound door is usually dedicated to a store (a "door per store"), there is less concern about getting specific products into the truck. Manufacturers, on the other hand, are challenged to crossdock "opportunistically," where they would need to marry up inbound shipments that contain SKUs for customer orders with other SKUs on those order that need to be picked - not an easy task.
In fact, SCDigest has been searching for some time for manufacturers that are doing that form of opportunistic crossdocking without much success, though Whirlpool is doing some of that now in its reconfigured supply chain network. In that new model, Whirlpool is capable of combining crossdocked goods from factories or other DCs with other appliances in storage at a given DC for store delivery.
Many if not most manufacturers/distributors can do crossdocking for backorders, but doing crossdocking opportunistically presents many challenges. That includes using First In, First Out (FIFO) principles, because companies, especially those in expiration date sensitive industries, are reluctant to ship a more recently manufactured/received product if older product is sitting on the shelf, even if that requires extra handling than would be the case if the inbound receipts were crossdocked.
(Distribution/Materials Handling Story Continues Below)
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