This methodology allows to reduce inventory levels and cut warehousing costs, benefitting both companies and customers.
In today’s constantly evolving business world, supply chain efficiency is key to staying competitive and meeting customer demands. In this sense, a logistics strategy on the rise in recent years is cross-docking. This article is a deep dive into cross-docking and its potential benefits for companies.
What Is Cross-Docking?
Cross-docking is a logistics methodology where inbound products (usually from trucks) are unloaded and then directly loaded into other distribution vehicles, spending little or no time in the distribution center.
Traditional approaches include long warehousing periods, whereas cross-docking seeks to speed up the distribution process and cut warehousing-associated costs. When done right, it is an agile, efficient way to manage merchandise flows.
According to a report from Transparency Market Research, the global market for cross-docking services is expected to grow 6% CAGR until 2030, spurred by the growing need for efficient supply chains and logistics-related cost savings.
The Business Benefits of Cross-Docking
Cross-docking is forecast to grow worldwide thanks to its sizable business benefits:
Reduced Inventory Levels and Warehousing Cost Savings
One of the biggest benefits of cross-docking is a significant reduction of inventory levels and costs associated with long-term storage. According to a study from the Council of Supply Chain Management Professionals (CSCMP), companies that implement cross-docking achieve, in average, 18% in warehousing cost savings and a 22% reduction in inventory levels.
Cross-docking also streamlines the distribution process by eliminating unnecessary middle steps. According to a report from Capgemini Consulting, organizations that adopted cross-docking have improved the efficiency of their distribution operations by 29%, resulting in faster delivery to customers.
Less Risk of Damage and Loss
As products spend less time in the warehouse and their manipulation is reduced, cross-docking mitigates the risk of damage or loss during the distribution process.
Improved Inventory Visibility and Control
Cross-docking requires companies to enhance their coordination and monitoring of operations in real-time. According to Gartner, this methodology helps improve inventory visibility by 40% throughout the supply chain.
Resource/Warehousing Space Optimization
Cross-docking lets you optimize how you use your company’s resources by minimizing the warehousing space you need. According to a study from Deloitte, organizations that adopt cross-docking increase their space utilization capability by 20%, resulting in a more efficient use of their facilities.
Companies can adopt a number of approaches to implement cross-docking methodologies based on their needs and operations:
True (Pure) Cross-Docking
Under this approach, products enter the distribution center and are directly loaded into outbound vehicles without spending time in storage. This requires careful planning and coordination to ensure the right products are available at the right time.
In this type of cross-docking, products from several suppliers are consolidated into a single shipment for a specific customer. According to a report from Supply Chain Digest, consolidation cross-docking can reduce shipment costs by 25% on average.
Under this approach, a large shipment is split into individual products to be shipped to multiple destinations. Companies that implement deconsolidation cross-docking may considerably shorten delivery times to end customers.
Aerodoc’s EVP of OPS & Customer Service Estefanía Sisatzky explains that Aerodoc can adopt every type of cross-docking. “We act as our customers’ eyes and hands,” she says, adding that “They give us detailed instructions of what is known as ‘cargo segregation’ and how to prepare orders for shipment to different destinations. Our customers can do their cross-docking virtually using Aerodoc as a platform.”
What You Need to Consider to Adopt Cross-Docking
Cross-docking can bring a number of benefits but requires careful planning and execution to be deployed properly. Factors to consider include:
Technology and Information Systems
Technology is key to deploying cross-docking successfully. You need cutting-edge information systems that enable real-time monitoring of product flows, inventory tracking, and tight coordination between every step in your supply chain.
Coordination With Providers and Customers
This is critical for a successful adoption of cross-docking. Make sure your communications are fluid and synchronize activities to ensure the right amount of product is delivered timely.
Your employees in charge of cross-docking must go through comprehensive training, as product sorting, re-labeling, consolidation, and distribution require specific skills.
Adequate infrastructure is key for a successful cross-docking strategy. Your facilities must be designed so products move quickly between distribution vehicles, minimizing wait times and optimizing flows in the cross-docking area.
In today’s business world, where agility and efficiency are key, cross-docking is an innovative logistics strategy. When done right, it can be a powerful tool to increase your competitiveness and help you succeed.
Aerodoc plays a key role in the cross-docking process by offering warehousing and international dispatch solutions. A leading logistics and distribution company, Aerodoc has been helping companies expand their global reach and improve their operations for more than 25 years.
Its Advanced Warehouse Managed Services (AWMS) service goes beyond mere warehousing, providing a comprehensive solution that incorporates logistics intelligence and value-added services.
In this sense, Sisatzky explains that cross-docking requires outstanding warehouse management, adding that “For Aerodoc, another key aspect is having a good platform where customers can see how transparent and optimized the process is.” According to Aerodoc’s senior executive, warehouse layouts are just as important as the platform, as distribution must be flexible, dynamic, and efficient. “You need space, not just for storage, but also for cargo handling or picking and packing.”, she adds.
Aerodoc’s warehouse occupancy rate has gone from 65% to more than 100% in recent years, highlighting the company’s ability to meet increasing demands from a market in constant expansion while offering coverage in more than 170 countries.
“We manage our customers’ cargo and inventory from our Miami warehouse and then perform wholesale shipping as per their instructions,” explains Aerodoc’s COO Dan Zonnenschein.