Wednesday, February 1, 2012

What is Cross Docking and Why You Would Use It

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.  

Copyright 2012 James L. Alyea. All Rights Reserved.