What is Cross Docking in 3PL; Know Benefits & Usage

DelGate Team
March 11, 2022
3pl-third party logistics

What is Cross Docking? Cross docking (Transloading) is a logistics procedure where a 3Pl company distributed products from a supplier or manufacturer directly to a customer to reduce storage time.

With immediate solution tactics like cross-docking, modernization has driven enterprises to speed up their warehousing and setup procedures in order to keep their strategic advantage and customer retention. Due to this, warehousing and logistics have evolved into a strategic industrial sector.

By reducing storage time and optimizing the supply chain, cross-docking allows products to be prepared and sent practically immediately to customers as opposed to being stored after unloading.

At DelGate, we provide 24-hour cross-docking service in Vancouver B.C.

Table of Contents

When Is Cross-docking Used?

In order to enhance efficiency, reduce costs, and improve customer satisfaction, it is crucial to make an informed decision about implementing cross-docking, as it may not be suitable for every warehouse’s requirements.

Cross-docking may help speed up the supply chain for various items.

Cross-docking can be particularly beneficial in expediting the supply chain for different types of goods. For instance, it can significantly improve the transportation of perishable or temperature-sensitive items, such as food, which require swift delivery.

Additionally, cross-docking can streamline the process of transporting pre-packaged and categorized goods to specific customers, resulting in faster and more accurate operations.

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Streamlined Operations and Faster Order Fulfillment

Cross docking revolutionizes the logistics process by eliminating the need for traditional warehousing. With products being directly transferred from inbound shipments to outbound shipments, the time spent on handling and storage is significantly reduced. This streamlined operation results in faster order fulfillment, shorter delivery times, and ultimately, improved customer satisfaction.

Efficient Inventory Management and Cost Savings

By minimizing the need for long-term storage, cross docking helps businesses manage their inventory more efficiently. The reduced holding time mitigates the risks of inventory obsolescence and damage, resulting in cost savings. With lower storage costs, businesses can allocate resources more effectively, focusing on core operations and strategic initiatives.

Enhanced Supply Chain Coordination and Accuracy

Cross-docking fosters better coordination between suppliers, manufacturers, and retailers, leading to improved supply chain management. The direct transfer of products from one shipment to another enables greater accuracy in inventory tracking and reduces the likelihood of errors or discrepancies. This heightened level of coordination enhances overall supply chain efficiency and helps businesses meet customer demands more effectively.

Time-Sensitive and Perishable Goods Optimization

Industries dealing with time-sensitive or perishable goods, such as fresh produce, pharmaceuticals, and e-commerce, greatly benefit from cross-docking. The reduced time between receipt and delivery ensures that perishable goods reach their destinations quickly, preserving their freshness and quality. This optimization significantly minimizes product waste and improves overall supply chain performance.

Flexibility and Adaptability to Market Demands

Cross docking provides businesses with increased flexibility in meeting customer demands and responding to market fluctuations. The ability to rapidly sort and redistribute products allows for quick adjustments to changing orders, seasonal demands, or unforeseen market shifts. This agility in supply chain operations empowers businesses to optimize their processes and stay competitive in dynamic markets.

In the following, we’ll look at two different methods of cross-docking:

Direct or Pre-distributed Cross docking

The products have already been separated and simply need to be accepted by departure units that have been grouped according to delivery destinations.

Because the items do not need a lot of interaction, this is the most basic model. It requires the lowest costs in terms of manpower and is applicable to any type of product.

Indirect or Consolidated Cross docking

The items are collected and transported to an additional site or sorting place, where they are divided and organized in preparation for delivery to various destinations.

The items are selected in the picking area and distributed in closed containers that pass through certain locations on their way to the merchandise receivers.

Cross Docking Warehouse

Cross docking is mostly done in a warehouse or distribution docking port, where vehicles arrive and leave frequently. In many cases, incoming and outgoing deliveries are divided into two parts, with specific center space for sorting and packing merchandise.

Simply, trucks, ships, and airplanes deliver cargo to the incoming warehouse. They are then taken to the center of the area to be sorted and inspected.

They are immediately loaded on outgoing transport and dispatched to clients as they are finished. The majority of goods stay less than 24 hours on a cross-dock before being dispatched to their ultimate destination.

Read about Make The Best Decisions For Your Shipments By Understanding Transport Options in Logistics

Direct Shipment vs. Cross Docking

Because items are shipped straight from the provider to the user, direct shipping is distinguished from cross docking. The buyer will almost always buy an item straight from the producer. This strategy saves transit costs significantly, but it necessitates more logistical processing and preservation area on the seller’s part.

Because suppliers send the products immediately, it’s critical that they always have adequate inventory on hand. One of the steps is to make the business grow and go so far as to take pre-orders. If those companies require additional inventory, they’d have to either make it or get it from a third party, which would lead to a queue and longer shipment periods for the consumer.

Because they have total control over the pre-shipment process, this strategy is preferred among most garment firms and many sorts of Internet enterprises. In this way, the goods are received by the distribution center, warehoused, and made accessible to outbound shipments as they happen to be needed or demanded.

Read about Amazon Marketing Techniques You Should Consider in 2022.

Cross Docking vs. Drop Shipping

Cross-docking and drop shipping are two alternative stock control strategies for keeping goods out of your warehouse. Things are provided directly from your vendor to your customer via drop shipping, which means you would never handle any of the merchandise. Cross docking occurs when an item is received at your warehouse, processed, and then quickly dispatched to clients.

Dropshipping is a popular inventory management technique because the seller doesn’t have to pay for storage or any physical counts of inventory. This frees up cash for other operations, such as marketing and advertising.

Benefits of Canada Cross Docking

Cross docking facilitates a simpler distribution chain, which is perfect for companies seeking to expedite product delivery, save costs, and minimize shipping times. The following are some of the advantages of cross-docking for eCommerce.

Expedited Shipping & Receiving

Because storage work may be decreased or gone entirely, items arrive at their ultimate destination considerably faster. As larger quantities are split down into manageable packages and put onto cargo moving on the same route, shipping performance will improve.

Collecting goods is also less complicated since it just involves bookkeeping for stock that is collected and then delivered instead of integrating merchandise into a warehouse management system (WMS) to optimize the flow of items.

Reduce the Costs and Time

The cost of goods sold (COGS) makes up a large component of inventory costs. A company must not only buy things but also pay for first-mile and last-mile shipping and handling fees.

On the other hand, this service eliminates the requirement for a large eCommerce warehouse to efficiently deliver items to clients. Cross-docking makes the inventory process more efficient, allowing for rapid restocking.

Inventory monitoring is also performed in bulk rather than tracking inventory movement across your whole e-commerce distribution chain. You save time while keeping inventory shipments untouched, resulting in a more effective inventory system.

Have a Central Location for Product Handling

Last-mile delivery service from a single central facility, known as a cross-dock warehouse, may assist your distribution network to run more smoothly. A fulfillment center, in other words, serves as a sorting facility. Orders can be pre-sorted for rapid delivery to another area of the facility, which then gets loaded onto an oncoming truck.

The product is processed and then allocated to numerous forwarders depending on the shipment’s destination at the cross-docking point. Orders may be assigned to individual drivers for delivery to customers based on proximity.

Furthermore, having a central facility for stock management is a wonderful option for B2B fulfillment since it eliminates the need to keep stock, pick and fulfill individual goods.

Reduce Material Processing

Cross-docking activities require fewer warehouse operations, which means less tracking, storing, protecting, and managing various SKUs. Cross-docking enables us to keep the asset turnover constant and high.

Certain commodities profit from minimal material handling throughout the distribution chain to ensure reliability. This is particularly true for fresh goods like food and beverages.

Furthermore, certain items (e.g., cosmetics, medications, and vitamins and supplements) have a limited shelf life, which benefits from companies acquiring products sooner due to a less complicated supply network.

Cross docking service is particularly beneficial to high-quality items since it reduces the risk of destruction from being kept momentarily before being packed and transported.