We have done pieces over the past year on cross docking (See, for example, Understanding the Types of Non-Putaway Distribution Models, Cross Docking for Manufacturers, Part 2, which has a link to Part 1.)
The subject came up again in some email correspondence with a reader, and led me to again wonder – is cross docking outside of retail distribution a myth?
Many speakers on the supply chain circuit reference the wonders of cross docking, and in retail, they are apparent. Home Depot, with its new network of rapid deployment centers, is just the latest of many to employ the tactic. (See Aggressive Supply Chain Transformation at Home Depot.)
But cross docking is fairly easy in retail – often, you have a “door per store” in the DC, and there isn’t a lot of complexity with regard to synchronizing cross dock goods and goods picked for stores from storage. I am over simplifying, but to an extent, what makes it on the truck for the store does, and what doesn’t doesn’t, especially if there are frequent/daily store deliveries.
But it’s more complex in non-retail. The issues include:
- Timing/Synchronization: How do you efficiently match up incoming goods to be cross docked with other line items on the customer order that will be picked from storage and put on the same truck? Clearly, a large holding area would be needed, and you have complexities about what trailers to unload to match up with the planned cross docks, etc.
- Inventory Management Issues: If you “opportunistically” cross dock incoming goods for an outbound order and you have inventory of that SKU in storage, you are shipping newer product before older product. This is generally a huge no-no for any sort of date coded items, but something most companies try to avoid for any inventory for obvious reasons.
- ERP/Inventory Allocation Issues: To cross dock effectively, you may need to allocate inventory that hasn’t yet arrived to orders. That inventory would typically be “visible” based on an advanced ship notice (ASN). Many order management systems cannot handle this type of allocation, and even if it can, again, there are complexities – how would the system know when you wanted to cross dock and allocate inbound inventory and when you do not?
So again, it seems possible that cross docking outside of retail is simply an urban legend. I have now asked numerous consultants and WMS software companies, and I have yet to find an example of it in non-retail (though there are examples of “merge-in-transit,” a form of cross docking I suppose; but that’s not the real thing).
So if you are a manufacturer or distributor and you are doing real cross docking in your DCs, or you know of an example, please let me know at the Feedback button below.