Cross-docking - an alternative distribution system
When you have an online store, it is important to skillfully plan logistics costs, which consume a significant part of the company's budget. What's more, logistic chains are often quite long, so disconnecting even one link can reduce these costs. The most problematic are warehouses - costs related to their construction or rental, protection, storage of goods and making stocks. As it turns out, the reduction of these costs is possible, e.g. in terms of distribution, the so-called cross-docking. What is cross-docking, who should use it and what are its advantages and disadvantages?
What is cross-docking?
Simply put, cross-docking is a type of distribution system that omits the part related to the storage of goods in the warehouse. The goods are delivered to the warehouse, but they do not stay there for longer, because they are immediately reloaded and shipped, i.e. the goods remain in the warehouse only while reloading. Moreover, there is no need to stockpile, because the goods are delivered according to the current needs of the recipient. Thanks to cross-docking, it is possible to fulfill many orders of goods in one run.
Cross-docking is also often defined as a change of the means of transport of goods, i.e. reloading them from trucks to delivery trucks, after prior grouping them.
Advantages and disadvantages of cross-docking
Benefits:
- reduction of the number of warehouses,
- lower logistic costs related to the storage of goods, creating inventories, warehouse protection, handling individual products,
- improved supply of distribution points - if, for example, an online store also has its counterparts in the form of traditional stores,
- fast shipment of goods ready for shipment between the supplier and the customer. That is, the number of possible downtime between production and delivery of the finished product to the customer is eliminated - the item ordered by the customer reaches him faster than in the traditional distribution chain,
- minimization of warehouse space - a large warehouse becomes unnecessary,
Defects:
- the need for skillful and meticulous synchronization of the work of various suppliers whose products make up the final order,
- risk of losing control over the flow of goods - uncontrolled replenishment of stocks may lead to a situation where we simply have too much of one item. In addition, you can lose control of what has already arrived, where and in what quantities,
- the need to quickly group deliveries and reload them. Otherwise, there is a risk of chaos.
Cross-docking - who is this solution for?
This system is the most beneficial for retailers (thanks to the small number of goods, the risk of chaos when grouping goods is reduced) or for the same orders of a large number of various goods.
As you can see above, cross-docking is a solution with not only advantages but also disadvantages. It only presents a way to shorten the logistics chain and reduce the costs associated with it. It is not the final, unique and exclusive solution. However, while there are many other ways to reduce the logistics costs of an online store, cross-docking may be ideal for you.
