New World Business Solutions on Warehouse Management: How to be a lean, mean cross-docking machine
Today’s lean warehousing managers are trimming the fat by eliminating unnecessary tasks and by improving value-added activities. One strategy they frequently adopt is cross docking, the practice of expediting the flow of product from receiving to shipping with a minimum of handling in between.
Although cross docking has become something of a buzzword lately, it’s a strategy that has been around for decades. Why rehash an old practice? Because cross docking helps shippers address specific business needs that are more important today than ever.
A little product, a lot of savings
First, cross docking accelerates speed to market by routing items to their end destinations as soon as they are received.
“Our cross-docked items literally spend zero time on the warehouse floor,” reports Steve Avila, shipping and receiving traffic manager at Emulex Corporation, a manufacturer of computer hardware that cross docks about 85 percent of its shipping volume. “They go in one door and immediately out the other,” he says.
Cross docking also improves the bottom line. Because product is not sent into inventory, companies that cross dock reduce their storage requirements and consequently eliminate storage-related labour and inventory costs.
McCain Foods USA Inc., which manufactures nearly one-third of all french-fried potatoes produced internationally, has been cross docking its high-volume, fast movers for more than a year. Director of Warehousing Timothy Egan saw the benefits firsthand. “We saved twenty to thirty percent in total warehouse costs by not sending product into storage. And that’s with just one percent of our total SKUs (stock-keeping units) being cross docked,” he explains
Finally, cross docking allows companies to meet customers’ specific needs when time is of the essence. Some examples of such needs include product promotions and other timed marketing strategies, support of just-in-time practices, and consolidation of multiple supplier networks.
Despite these proven benefits, not many companies are cross docking today. Those that do often find themselves cross docking only a small percentage of their shipping volume. One reason, perhaps, is that the concept of not storing product in anticipation of demand is often difficult for managers to grasp.
Egan agrees: “Our supervisors had to change their way of thinking. Instead of storing product in the warehouse, they had to get product out the door and set up labour differently to make it happen.”
Other companies simply don’t know where to start, or may even get involved in cross docking by accident. That was the case for Emulex, Avila says. “We were incurring a tax liability for shipping from one of our plants in Mexico directly to our customers. This forced us to rethink our shipping practice and set up a cross-docking operation here in the U.S,” he says. In McCain’s case, cross docking began as part of the company’s lean, Six Sigma quality initiative in manufacturing and spilled over to its distribution operations.