Cross-docking and inventory management are examples of what concept?

A. Relationship Marketing.

B. The distinction between a channel of distribution and actual physical distribution of a product.

C. Transaction Marketing.

D. Logistics.

The answer is D:  Logistics The answer is briefly explained below.

What is cross-docking?

Cross-docking is a logistics procedure where products are moved out of a manufacturing plant and sent directly to the customer with minimal material handling taking place in between.

With the use of this technique, businesses can not only reduce material handling but also reduce the need for having products stored in the warehouse.

Usually, any product sent directly to the loading dock from the manufacturing area is earmarked for outbound deliveries. In some instances, products arriving at the loading dock are not from the manufacturing area, but are purchased for being re-sold or is being delivered from a different manufacturing unit to be shipped from this warehouse.

Cross-docking has made it possible for companies to achieve their objective of the optimized supply chain by allowing shipments to be expedited to the customers.

Thus, they are able to get what they want and when they want it. However, it is also fraught with risks which makes cross-decking ideal for one-offs rather than being used as a standard operating procedure.

Cross-docking types

Warehouse management can choose from different types of cross-docking scenarios based on the type of product being shipped.

Manufacturing cross docking

Inbound and purchased products necessary for manufacturing are received by the warehouse. Further sub-assemblies may be prepared for processing the production orders.

Distributor cross docking

Inbound products from different vendors are consolidated into a mixed product pallet to be delivered to the customer upon receipt of the final item.

An example is of computer parts distributors who can source components from various vendors and combine into a single shipment for the customer.

Transportation cross docking

Shipments from a number of different carriers are combined together, especially popular in the small package and less-than-truckload industries that work on economies of scale.

Opportunistic cross docking

This is applicable in all warehouses where a product is transferred directly from the goods receiving dock to outbound shipping for meeting a known demand of a customer sales order.

Retail cross docking

Products are received from multiple vendors and sorted onto outbound trucks to be sent to different retail stores. A major corporation to use this method was Wal-Mart back in the 1980s.

They had two major purchases, one was sold daily and called staple stock; the other was procured once in large quantities and sold without being stocked again, known as direct freight.

The latter was where they applied cross docking and reduced warehouse costs by keeping the products in storage for the minimum time.

Products that can go in for cross docking

Some materials are better suited for use in cross-docking as compared to others. Here is a list of the items that can be used in cross-docking.

  • Perishable items requiring immediate shipment
  • High-quality items not requiring quality inspections at the time of goods receipt
  • Pre-tagged products that can be readily sold to the customer
  • New items for launch and promotional items
  • Staple retail products that show little demand variance or are in constant demand
  • Pre-picked and packaged customer orders from a different production warehouse or plant

What are some of the instances when cross-docking can be used?

Not every need of a warehouse can be managed by means of cross-docking. Hence, it is essential to make a well-informed choice on whether cross docking will help improve productivity, customer satisfaction, and cost considerations for the business in question.

The use of cross-docking can help advance the supply chain for a number of different products. Temperature-controlled and unpreserved products such as food that need to be transported at the earliest can benefit from this process.

Sorted and packaged products that are ready to get transported to a particular customer can also be moved out faster and in a more efficient manner by means of cross-docking. Some of the specific reasons why a warehouse may consider cross docking are as follows:

  • Allow the creation of a central product site for sorting and combination of similar products such that they can be delivered to various locations in a highly productive and by the fastest means possible. This is a model known as a hub and spoke
  • Permit the combination of numerous smaller product loads into a single transport system thus saving on transportation costs. This is known as consolidation arrangements
  • Larger product loads are broken down into smaller ones to facilitate easy transportation and delivery to the customer. This is also called deconsolidation arrangement

Benefits of cross-docking

The use of cross-docking techniques has been beneficial to many companies. Some of the benefits that it has to offer are:

  • Reduced labor costs since the products no longer have to be physically handled in the warehouse.
  • Reduced time between production and delivery to the customer which helps in improving customer satisfaction.
  • Reduced need for space in the warehouse since the product need not be stored in any form.

Cross-docking risks

Cross-docking does not involve storing the products in a manner prescribed by the company; hence the risk of loss of inventory goes up significantly if this technique is used on a long-term basis.

For effective implementation of cross-docking, warehouse and supply chain managers need to put in place robust processes for inventory control and also have the warehouse employees trained in their processes.

Though the items for cross-docking are not put away as per standard measures, the need for proper accountability of those goods should not get decreased by any extent while taking into account the stock and doing a reconciliation of customer and supplier invoices.

Conclusion

An essential part of cross-docking, besides inventory management, is customer relationship management. Proper management of inventory as well as customer needs across the supply chain is very important.

A cross docking service provider who has the experience and means for implementing real-time customer support will be capable of managing inventory even before it arrives, thus guaranteeing that customers and other stakeholders are not left to wait for their required products or materials.

References

  1. Concept and definition of cross-docking: Retrieved from ame.org
  2. Risks with Cross Docking: Retrieved from the site thebalancesmb.com
  3. Cross Docking Benefits: Taken from commercialwarehousing.com

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