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Ever wonder how some products make it to their destination in record time? Better yet, what about the ones that arrive on time and don’t cost an arm and a leg? The Hail Mary strategies behind logistics and supply chain can vary from business to business, but often enough for retail, a major way to lower cost and raise efficiency is through a process called “cross docking”.
Let’s talk about this. More importantly, let’s discuss how it works and how your company could benefit by implementing this logistics strategy.
Cross docking is a logistics strategy where products from a supplier or manufacturer are distributed directly to a customer or retail chain transport with little to no handling time and storage. Think of cross docking as a transaction. On one end is the carrier of the product or in this case a cashier. On the other lies the recipient or retail chain that easily receives the goods without having to wait endlessly and pay for large amounts of warehouse space. Below is an image of how this process works.
Another way to think of cross docking is the wheel of a bicycle. The hub is the supplier of the goods and the spokes are the various retailers that are pulling their goods from the one supplier. This creates balance and efficiency and deletes the need for large warehouses and many distribution centers.
What are some other benefits of cross docking?
- Lower warehouse and storage costs
- Efficient supply loads
- Lower transportation costs
What about disadvantages?
- Need for technology to time and manage shipments
- Need for large fleet of trucks
- Better fit for major retailers and not small business
Within cross docking lies many tactics in how to make it all work to your benefit. If you are a retailer that sells various types of goods, cross docking can use “consolidation” which would take small shipments and compile them into one large transport. Another tactic is when a major retailer that needs to distribute a large amount of product to various stores, but orders the supply in one large bulk. You can “deconsolidate”, which would allow this large bulk of supply to be fed into many trucks at one time, thus lowering the amount of stops that would have to be made by the supplier.
In the end, cross docking is a logistical method that calls for perfect timing and procedure but reaps the benefits of lowering overhead costs and streamlining turn around time. What does this mean for you? Well, it could boost your bottom line and shorten lead-time. For your customers it could mean lower retail prices, always-stocked shelves, and shipments being on time. Overall, if your company’s warehousing, transport or distribution costs are too high or being placed completely on your plate, consider investing in a 3PL service that can help you implement a cross-dock strategy.
Business has always been about paperwork. Stapling, printing, stamping, and signing were all parts of the purchasing process. Nowadays, this process has been almost completely digitalized and automatized. Thus eliminating the many errors that would occur from the handing off and processing of purchase orders and returns. What caused this change? EDI, short for electronic data interchange.
EDI is a technology that most of the business world uses for their business transactions including shipping, distributing, purchasing, and the dreaded return. Beginning in the 1960’s, at the start of the computer age, EDI was simply small data transfers from computer to computer. Major improvements occurred throughout the next twenty years as file sizes increased and the railroad industry gave major funding for research and innovation. By the end of the century, thanks to the development of the Internet, automotive, air, and major corporations were now all on board for using EDI to streamline their purchasing and shipping information.
In the past, before EDI, businesses had to wait days upon days for confirmation of their orders and shipments. It was also placed upon the business’s responsibility to manage and track their shipments, noticing any mistakes hopefully before it was too late. Today, the company client can track their orders through a 3PL provider, who retains all of the information. Businesses and service providers have access to all of this information in real-time through EDI portals. Now orders, returns and shipments are received and available for view within moments. Error frequency has also been almost completely eliminated because of everything being electronic, automatic, transferred through system standards.
So what does this mean for you as a company and potential client? It’s simple. Using a service that allows your data to be processed through EDI will streamline your business. Fewer mistakes, faster transactions, and ease of mind will all happen because everything goes as plan. You can stop constantly tracking and checking up on orders, making sure you have all the right paperwork, and wasting precious time. Thus allowing you to go back to what you do best: building your business.