Cross dock? It’s pretty, pretty, pretty good.

👋 Well hello there, Vendorville,

We’ve all been there. Sometimes, the sheer quantity of options for how to ship your goods to retailers can leave you feeling as confused as Larry David.

Have no fear. Vendorville is here to help demystify one of the most important (and complicated!) techniques in logistics: cross-docking.

What is cross-docking?

At the most basic level, cross-docking is when a supplier immediately transfers its goods from an inbound shipment to an outbound shipment at a distribution center, without storing the goods in the interim.

With traditional warehousing, a supplier sends its goods in bulk to the distribution center, which then stores the items. When a retailer places an order, the supplier uses teams of pickers and packers to sort the items and prepare them for transport.

With cross-docking, on the other hand, the goods are typically pre-sorted before their arrival at the distribution center, allowing them to be placed directly in the outgoing dock without needing to store large quantities first.

Because of the fast turnaround, suppliers will often require specific information from retailers, such as forecasted demand and detailed order information for individual stores. Because of this, there are two main categories of cross-docking:

👉 Pre-distribution: The supplier determines the final customer before shipping to the distribution center. At the facility, workers unload, sort, and place the goods onto outgoing trucks using predetermined instructions from the supplier.

👉 Post-distribution: The supplier determines the final customer after the items arrive in the distribution center. With post-distribution cross-docking, the goods stay in the facility for longer, but the distribution center is given more time to sort and pack, often using real-time data from the retailer.

Related Reading: The Basics of Supply Chain Logistics

Advantages of cross-docking

😀 Speeds up delivery times: Cross-docking allows goods to be delivered to the end consumer much quicker than traditional warehousing, as the items don’t need to be stored before transport.

😀 Reduces inventory storage costs: Less need for storage = lower storage costs! It really is just that simple.

😀 Lowers warehouse space requirements: Using cross-docking for even a portion of your inventory frees up space in the warehouse for other goods.

Risks of cross-docking

😡 Initial investment: Significant investment is needed to design and implement specialized cross-docking. As the goal of cross-docking is to transport goods as quickly and efficiently as possible, you might have to invest in warehouse automation to improve the warehouse’s reliability.

😡 Errors in demand forecasting: Nobody can perfectly predict the future, and this includes demand forecasters. Retailers may miscalculate the number of products their customers are willing to purchase, and may experience shortages since cross-docked items aren’t kept in storage.

😡 Coordination with carriers and retailers: As cross-docking requires close coordination between the supplier, carrier, and retailer, one bad link can break the entire chain. Suppliers must ensure that their carriers have the capacity to carry goods to where they’re needed at the right time, and that the retailers’ order data is up-to-date and calculated correctly.

Cross docking might be for you if:

👉 You need to move high volumes of goods quickly, especially if those goods can’t be stored for long (such as perishables).

👉 Your customers want their items quicker than traditional warehousing

might allow for.

👉 You have accurate demand forecasting and a close relationship with your retailers!

Any further questions? Check out SupplierWiki’s comprehensive cross-docking guide here.

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Let's Circle Back 🌀

Our very own Rick visited the SPS Commerce distribution center lab in Minneapolis! Touring a DC is a great way to understand the complexity of your supply chain. This first-hand knowledge can be valuable when sitting behind a computer disputing shortages or fixing forecasting issues.

Here Rick is, smiling at all the supply chain innovation around him:

Also, be sure to check out SupplierWiki’s distribution center lists for Home Depot and Lowe’s!

With all our best wishes,

Vendorville ♥️