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Benefits of cross-docking

More and more companies are identifying opportunities to incorporate cross-docking – the process of receiving product and shipping it out without putting it into storage. Cross-docks are generally used for “hub-and-spoke” arrangements, consolidation, or deconsolidation 


Hello,

I don't know why but I am intrigued by warehousing in general and cross-docking in particular. Mayby it has to do with the growing e-commerce market and the need for higher efficiency. I see upcomming 4Pl players that are specialised and focused on specific segments of our economy (fashion, lifestyle, electronics,...). 

Supply chain activities need to be organized as efficient and fast as possible. Customers are seeking products with the lowest competitive price. Companies therefore need to invest in new  state of the art technologies and network desig. This allows the companies to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, manage customer relationships, and service response logistics.

In today’s marketplace, speed and agility are the name of the game. Now, more than ever, manufacturers, retailers and ecommerce companies must move products through the supply chain quickly, efficiently and cost effectively in order to remain competitive.




Enhanced service 

Cross-docking allows products to reach their end destination more quickly and economically, ensuring that products are available when needed and supply chain costs can be reduced. This is particularly important for omnichannel operations challenged to meet increasing demand for same-day or nextday deliveries. 

Cross-Docking Outlook 

When used effectively, cross-docking can play an integral part in the value chain—improving service levels, increasing efficiencies and controlling costs. A growing number of companies are recognizing these benefits and making cross-docking part of their distribution solution. For many, using a 3PL to help manage the process allows them to minimize or avoid some of the pitfalls with the practice. Regardless of how the operation is handled, it is important to establish clear objectives up front. If goals include streamlining the supply chain and getting products to customers more efficiently and economically, cross-docking may be the right answer.

Outsourcing as an Option 

Given all the variables of cross-docking, many companies look to 3PLs to help manage the process, using a 3PL either exclusively or in addition to inhouse resources. Third-party providers offer a number of advantages, including: 

1. Reducing Costs: 

Cross-docking is less costly than a traditional warehouse, it still requires a significant investment in necessary resources, including space, staff and technology. Outsourcing helps companies to minimize that overhead commitment while still realizing the value of cross-docking. 

2. Flexibility: 

A 3PL can right-size an operation to meet business fluctuations. Sharing a cross-dock facility with multiple shippers, for example, not only helps to defray the overhead costs but also accommodate peaks and valleys in the shipping cycle. This flexibility can be helpful for promotions and seasonality. Of course, if a company has sufficient volume, a dedicated cross-dock facility may be most effective. If cross-docking is not an internal core competency, third-party providers can build and manage a dedicated facility as well. As a business evolves, so may its cross-docking needs. For example, distribution network changes may require a change in location, or product flow may change from full pallet to case picking. A third party enable clients to adapt to changing needs without a long-term commitment.

3. Advanced Technology: 

Systems that provide real-time visibility can be useful, given the need for forecasting, demand planning and order accuracy. Staying abreast of technology can be cost prohibitive for companies, so leaving the overhead investment to a third-party provider can be beneficial. 

4. Service Integration: 

For many, there is also value in the integrated service offering of third-party providers. Often companies seek out 3PLs that offer inbound/outbound logistics, traditional distribution services and value-added services. 

5. Experience: 

Typically, those who outsource opt to seek the expertise of a provider for whom crossdocking is a core competency instead of building that proficiency internally. They may have products with special needs – i.e. high-value/high-security products, temperature-controlled products and perishable items – and want to tap a 3PL’s proven processes and knowledge of industry best practices.




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What is Cross-docking?– Understanding the concept & definition

Understanding the advantages and disadvantages of cross-docking and how they fit with your organisation is an important step for evaluating the supply chain process and deciding whether Cross-docking is right for your organisation. Make sure you understand the key factor requirements of your organisation.  For example:  High Volume Turnover, Rapid turnaround, Perishable goods are all factors that indicate a successful fit for Cross-Docking.  Analyse your key factor requirements and decide from there.