Cross-docking is a flexible operations arrangement between firms that involves multiple suppliers arriving at a designated time at the handling facility where inventory receipts are sorted and consolidated into outbound trailers for direct delivery to the customer. Cross-docking is typically used to avoid storage and materials handling. Mass merchants in the retail industry using cross-docking receive store-specific assortments and are able to maintain continuous inventory replenishment without having to hold large stocks of inventory.
Cross-docking is defined as a system in which inventory is not stocked in a warehouse but rather is shipped for stores from the manufacturer. Shipments from manufacturers to Wal-Mart, a pioneer in cross-docking, arrive at Wal-Mart distribution centers where they are quickly sorted and transferred to trucks for direct delivery to stores. Because products are stocked only at stores, Wal-Mart significantly reduces inventory and thus handling, storage, and operating costs. Cross-docking streamlines the supply chain from the point of origin to the point of sale, which increases supply chain efficiency.
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