In the first part of this topic, we have talked about Cross-Docking as a part of warehousing. Now let’s dive deeper and talk about the advantages and disadvantages of Cross-Docking.
Advantages of Cross-Docking
- Greater Efficiency
Cross-docking is designed to be a rapid and efficient way to distribute your items. Cross-docking can only work if you simplify and streamline your loading and unloading procedures to quickly shift items from one truck to another, resulting in faster shipments to your customers – a significant competitive advantage.
- Reduced Warehouse Cost
Cross-docking allows you to drastically reduce your inventory costs. You don’t keep much stock for long periods because everything gets transferred from one truck to another almost instantly. While you may keep a few products while waiting for a truck, if it’s in your cross-docking warehouse, it’ll leave as soon as it arrives. You simply receive the products, scan them into your OMS, and ship them out as you cross-dock. There’s no need to be concerned about inventory becoming obsolete. No inventory to worry about becoming obsolete. No reordering. No stockouts. No shrinkage.
- Reduced Labor Cost
With cross-docking, you no longer have to pick and put away stock. This equals a major reduction in labor costs. Less work required means fewer workers needed.
- Decreased Lead Time
Lead time reduction is a significant benefit to cross-docking. Your products are being moved faster and more efficiently, which means they’re reaching your customers more quickly. This improves your customer service and reputation for fast delivery times.
Disadvantages of Cross Docking
- High-Cost of Precise Organization
High-quality technology, effective work processes, and quick personnel are required for the exact organization. You may be saving money on inventory and warehousing costs, but you’ll still need to invest in forklifts, pallet trucks, conveyor belts, and other equipment to ensure smooth and efficient operations. Electronic data exchange (EDI) and supply chain management (SCM) software may be required to trace products from suppliers to docks and finally to customers. Because several deliveries take place on a single day, each product must be unloaded and reloaded at specific times. Otherwise, the dock will become congested, perhaps resulting in product damage or loss.
- Increased Cost of Trucks and Docks
Cross-docking makes use of a fleet of trucks and other modes of transportation. If you don’t want to outsource your trucks, you’ll need space outside the warehouse to store them. Similarly, you’ll need to buy docks to put this system in place.
- Suppliers May Not Be Able to Do Cross Docking
Some suppliers may not be able to handle the tight deadlines that cross-docking demands. There’s very little room for error in both quality of goods and lead time. If you want to make cross-docking work, you should have trustworthy and reliable suppliers.
