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Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

June 1 , 2011

Logistics News: Interest in Crossdocking is High, but Challenges are Many

Potential and Current Users Cite Many IT System Limitations as Key Barriers; Spirits Distributor Uses Dismountable Containers for Route Deliveries to Eliminate Local DCs


SCDigest Editorial Staff

As the next logical step to reduce logistics costs, many companies are interested in crossdocking, which at a high level refers to some practice that involves moving inbound goods to shipping without putting them away first. (See also Getting Cross Dock DC Design Right.)

That was certainly apparent at the recent Warehouse Education and Research Council (WERC) annual conference in Orlando, where two of the popular round table sessions were devoted to crossdocking, with both sessions "sold out" in terms of pre-registration.

SCDigest Says:


"Many if not most manufacturers/distributors can do crossdocking for backorders, but doing crossdocking opportunistically presents many challenges."

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Moderator Mike DelBovo, a senior vice president of 3PL Saddle Creek Corp., started off by offering a rather expansive definition of crossdocking that included many DC processes, such as "merge-in-transit" and other crossdock-like tactics, into the crossdocking bucket. (Saddle Creek has sponsored research on crossdocking in the past, including a new report earlier this year based survey data relative to crossdock practices.)

There has always been a ceertain confusion in the industry as to how crossdocking is defined. A prime example is in the retail sector, the area where by far more crossdocking is performed than any other industry (with the exception of the less-than-truck-load (LTL) transportation sector, where the entire business model is based on crossdocking at freight terminals, but that is very different than most applications).

In retail, some observers will use the terms crossdocking and "flow through distribution" almost interchangeably, but most retailers see a difference. Crossdocked product is when product is moved directly from inbound receiving to outbound doors with no other processing - one touch. Flow through product, on the other hand, will undergo some processing first, such as price ticketing or store-specific distribution, which may delay shipment of that merchandise for as long as a day or two, but the product is nevertheless sent on to the stores without being first put away.

Department store chain Stage Stores provides a good example. The parent of banners such as Peebles and Palais Royal in addition to nameplate Stage Stores chain, the retailer operates smaller size stores in smaller towns, meaning it doesn't usually have enough goods going to a store to justify a full truck load for each delivery.

Instead, it has a contract carrier operating in each region that delivers to the stores in a multi-stop truckload. Because Stage Stores has negotiated a deal in which the carrier gets a fixed fee per carton or tote regardless of its size, it has an incentive to maximize the amount of goods that go in each store carton.

So, as inbound shipments are received, associates and the WMS system will determine if the goods can be directly crossdocked, either because the inbound carton is sufficiently large as it is or because the goods are needed immediately at the store.

In other cases, the cartons are moved internally for further processing, such as picking items from full cases for individual stores (using any of several automation methods, such as tilt tray sorters and garment on hanger conveyor), or even repacking a smaller carton already packed by the vendor for a specific store into a larger carton/tote with other merchandise going to that same store to save on freight costs. Stage Stores considers this "flow through" product which does involve more handling versus crossdock product, but again the key is it is never put away.


Crossdocking More of a Challenge for Non-Retailers


Crossdocking and flow through in general are much easier for retailers than manufacturers or distributors, because for a given period of time a outbound door is usually dedicated to a store (a "door per store"), there is less concern about getting specific products into the truck. Manufacturers, on the other hand, are challenged to crossdock "opportunistically," where they would need to marry up inbound shipments that contain SKUs for customer orders with other SKUs on those order that need to be picked - not an easy task.

In fact, SCDigest has been searching for some time for manufacturers that are doing that form of opportunistic crossdocking without much success, though Whirlpool is doing some of that now in its reconfigured supply chain network. In that new model, Whirlpool is capable of combining crossdocked goods from factories or other DCs with other appliances in storage at a given DC for store delivery.

Many if not most manufacturers/distributors can do crossdocking for backorders, but doing crossdocking opportunistically presents many challenges. That includes using First In, First Out (FIFO) principles, because companies, especially those in expiration date sensitive industries, are reluctant to ship a more recently manufactured/received product if older product is sitting on the shelf, even if that requires extra handling than would be the case if the inbound receipts were crossdocked.

(Distribution/Materials Handling Story Continues Below)


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At the WERC conference round table, there was both a high overall interesting in crossdocking and a lot of examples of at least crossdock-like practices

For example, one large consumer health care company receives offshored goods at specific DCs based on where the origin is (Asia, Brazil, Europe, etc.) and sends the receipts on to other three DCs in the network. But the barrier to crossdocking those inbounds is that its existing WMS just doesn't do this well - the WMS wants the goods to be in a "pickable" location before it can allocate the goods to the DC "orders." The company can make the inbound receiving location pickable and then turn it off again, but that takes some effort.

Somewhat surprisingly, system issues were highlighted by several companies significant barriers to crossdocking (see graphic below). Another consumer goods companyat the roundtable meeting said the way its ERP system worked, goods received one day simply could not be allocated for orders until the following day. So the best it can hope for is to have received goods sit in staging/temporary storage overnight. There was a general consensus that both WMS and ERP systems have progress to make to really empower crossdock processes.


Source: Saddle Creek Corp.

One retailer did a significant amount of crossdocking, but said its process was too "high touch," resulting in higher processing costs than in thought was possible. It also cited systems issues, but said it was looking at potential process/flow improvements in its DCs as well.

"A lot of times, we have to accommodate the crossdock process to the specifics of each building," a representative of the retailer said.

A wine/spirits distributor in the Southeast offered one interesting case study.

The company has closed down several small local DCs by using "dismountable containers." That is, it now picks specific local delivery routes at its main DCs into containers that are put on special trucks (four containers to a truck). Those containers are then simply dropped in a parking lot, where they stand on "legs" until pick-up by the route drivers again using specialized equipment for that day's deliveries. Previously, the local DCs had to pick product delivered from the main DCs for each route delivery truck.

However, the high costs of the equipment means the approach can only be used for the highest volumes areas. In other areas, however, it uses a modified form of that approach in which smaller containers are pre-picked for local delivery, and then those containers are then crossdocked directly on to those trucks without any additional product handling.

The group also discussed whether it would be feasible to do pick and pack operations in China or other low cost countries and then  crossdock the product upon receipt in the US, either at an import warehouse or company distribution center. One hardware distributor is currently investigating this option.

Most of the roundtable participants were early in their crossdock journeys - and there to learn.

"We know there is so much more we can do here," said one industrial products distributor.

How do you define crossdocking? Is it really possible outside of retail in terms of general distribution? How big an issue are IT system limitations? Let us know your thoughts at the Feedback button below.

ur feedback

Recent Feedback



Crossdocking is exactly as the wording suggests---freight that crosses the dock from the inbound trailer directly into the outbound trailer.
Anything that is staged on the dock that is being called crossdock is in reality a regular receipt coupled with short term storage.
The biggest challenge in my opinion is timing the inbound and outbound equipment so as to eliminate the second handling move and truly reduce cost.
Patrick Lombard
General Manager
Chicago Cold Storage Corp.




We started the process of Crossdocking over 6 years ago.  We had our set of struggles, but today, we are not doing any crossdocking, as we have been able to move ahead and are now being able to completely bypass our DC operations.  We have moved our processess upstream and are now able to label in the country of origin, sort based upon final destination and deliver to our carrier`s dock across the US, for them to make the final mile delivery.
Retailers and Non-Retailers that know the destination of the freight before it arrives at their dock, should be able to take advantage of crossdocking.  You might have to think of ways "around" you IT limitations, but those limitations are there for a reason.  My experience is that IT is there to stop you from doing something bad to the whole company.  If you work with them, find out their issues and bring back solutions, they will work with you as a partner.
Retailers and Non-Retailers that know the destination of the freight before it is loaded into a container at the Country of Origin should be working on being able to label in the country of Origin to be able to either Bypass the DC or at least crossdocking it without having to relabel.
Charles W Kantz
VP Logistics/Warehousing
Bakers Footwear Group