- Imagine that you are operating a warehouse where you receive large quantities of similar items from manufacturers and distributors. Upon receiving, you store the items in the warehouse.
- You break the bulk shipment and, store items into respective areas where they sit until they are required to be shipped.
- Next, you receive an order for a combination of various items from downstream smaller distributors or retailers.
- You pull the items from the shelves that you need for each individual shipment and make up the truckload.
- You call the transporter to send the truck, load it when it arrives, completing the receiving and shipping cycle.
How would you like to do the following instead?
- Schedule the trucks carrying the inbound deliveries and the trucks to take the outbound shipments to arrive at the same time at your warehouse.
- You unload the bulk quantities from the inbound trucks.
- Assemble the outbound shipments right on the docks, without storing them.
- Load the outbound trucks, provide them the shipping documents, and off they go.
This is cross-docking.
As you can imagine, cross-docking saves a lot of time and effort, resulting in huge cost savings by avoiding double handing and storage – potentially millions annually for a decent-sized warehouse.
Due to a large number of permutations and transactions as well as documentation, computer programs are used to plan and manage the cross-docking process. Very detailed coordination and close monitoring are required to make things happen just in time for cross-docking to be successful.