When considering lean manufacturing and the 8 wastes (transport, inventory, over-processing, overproduction, motion, waiting, defects, and skills), 2 of those wastes are pure logistic operations while the others can become a logistic issue. One of the best options to reduce some of those wastes (not eliminate) would be to have a cross dock operation.

What is Cross Docking?

A cross docking operation is when a product from a supplier or manufacturing plant is distributed directly to a customer with minimal handling or storage. It’s a kind of just-in-time operation where the product arrives at a facility where it’s segregated by final destination and shipped right away. Ideally, no storage is needed, and handling is minimal.

The Complications of Cross Docking

We have seen more and more companies try to have a cross dock operation as their main logistic operation, but it’s not easy, and it certainly doesn’t apply to every product.  Even with some automation, like an automated unloading system and conveyors that sort everything according to where it needs to go, a cross dock operation is not easy to achieve. A lot of factors come into play:

• Coordinating inbound and outbound trucks and trailers
• More handling is being asked by the end costumer, because they want to eliminate unnecessary inventory (waste)
• Forecasting demand is not an easy task
• Sales people like having inventory
• Production schedules are not easy to align
• Lead times from plant to warehouse to customer can be big
• Warehouses receive more product than needed, because production batches “needed” to be big
• Product needs to be in quarantine for days or weeks

As we can see, it’s not easy to have a cross dock operation. But if we think about it, the perfect cross dock operation (with current market need) is not to have everything work as cross dock, but to just focus on what could work for your operation. For example, if you have an item that, doing an inventory analysis, you have over two or three months of inventory, maybe that product has a solution. You can propose to the supplier that they hold that inventory and send it to you weekly or daily, depending on how good your order management is. To start analyzing if it could work, you can have a safety stock (which creates some security of not running out of product), and once that operation is mature, you can migrate to a pure cross dock operation.

Cross docking is difficult, especially now with orders being smaller and with more variety. This trend creates a challenge, because now you demand the same smaller, more varied orders from the manufacturer, and let’s face it – manufacturers like to produce big batches of product because it’s easier, faster and less expensive, than changing according to an exact demand. Also, manufacturers have sales goals, so they will be pushing (with some extra benefits) to sell more and put more product out in the market even if it stays in your warehouse.

Practical Cross Docking Solutions

So, realizing that a pure cross dock operation is somewhat utopic because so many factors must be aligned, how would we design a practical operation with cross dock, storage, picking and sorting involved? Experienced consultants can help you analyze data and decide which processes best apply to your operation. One useful method is to make a high-level layout in the format of a process flow diagram, like below, to see how cross dock flow could work in your facility.

Obviously, this will change from one warehouse to another, because of different operational profiles, different suppliers, different customers, different needs, etc.

If you’d like to evaluate if an operation like this would work for you, don’t hesitate to contact us. Our team of consultants can help you decide the best processes and automation for your operation by analyzing your data and understanding your needs.

Author: Carlos Minjares