LOGISTICS: WAREHOUSING & DISTRIBUTION 2008 - Cross-docking supports lean inventory strategies

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Best for products not requiring buffer stockBy Peter A. Buxbaum, AJOTCompetitive companies exhibit a continuing focus on cutting costs from their supply chain by more effectively matching supply for their products with customer demand. This requires speed and agility to move products more quickly, efficiently and cost effectively.
A study undertaken by Saddle Creek Corporation, a logistics services provider headquartered in Lakeland, Florida, indicates that more companies are using cross-docking to achieve these goals. The study also examined which industries and products would most likely benefit from a cross-docking strategy. These findings were validated by logistics experts who spoke to AJOT.
“Cross-docking,” according to the Saddle Creek paper, “is defined as the process of receiving product and shipping it out the same day or overnight without putting it into storage.” A cross-dock facility typically has truck or dock doors on two or more sides with little or no storage space. These facilities are typically much smaller than conventional warehouses or distribution centers.
The Saddle Creek study, which was completed in February 2008, showed that 65% of respondents either currently cross-dock or plan to do so within the next 24 months. Half of those who currently cross-dock are considering cross-docking more of their total throughput. In order to keep products flowing through the facility, 66% of respondents reported that products remain at their cross-docking facility for one day or less, while 29% said products reside at their cross-docking facility for half a day or less.
“Cross-docking comes mainly to support an inventory strategy,” said Steve Hill, senior marketing manager at Menlo Logistics in San Mateo, CA. “Some industries need to stock products in order to handle unpredictable demand make. Cross-docking works when you have high-velocity items and predictable demand.”
For example, auto parts manufacturers tend to deliver similar quantities of the same products on a regular basis. “The auto plants use the same quantity of the same parts every week,” said Hill. Cross-docking is economical in this case because it deconsolidates full truckloads of like parts to build full truckloads of a variety of parts going to a single destination.
Retailing is another industry that can see particular benefits form cross-docking, according to the Saddle Creek study, where its has been used to pick customer orders and handle the last-mile shipment to the customer and to consolidate LTL into truckload to reduce the number of deliveries to retail outlets.
Retailers have also benefited from newer cross-docking strategies that use the technique farther upstream, according to Pat Lemons, vice president of operations at Yellow Transportation Inc. in Overland Park, Kansas. “We have seen more cross-docking going on at the ports, especially west coast ports,” he said. “Containers are deconsolidated and truckloads are built for delivery to specific retail accounts.”
These operations are able to allocate individual cartons of products to specific stores based on point-of-sale data, according to Hill. This is a dramatic example of how cross-docking helps to match supply with demand.
Trailer-load and LTL shipments are the most common modes for inbound and outbound shipments, according to the report. “For inbound shipments, trailer loads (51%) are more prevalent than less-than-trailer (LTL) loads (34%),” the report said. “Outbound shipments have virtually the same breakdown.”
The Saddle Creek survey showed that durable goods, food and beverage products, and perishables are among the products that are regularly cross-docked. “Other types of sensitive products are also good candidates for cross-docking,” the report said. “A quarter of survey respondents who cross-dock ship high-value/high-security goods.
“Based on the plans of respondents who expect to begin cross-docking in the next 18 to 24 months,” the report added, “the trend toward cross-docking more sensitive pr

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.