Cross Docking in Distribution Operations - Coursework Example

Cross Docking Name: Course: Instructor: Institution: Date of Submission: Cross Docking in Distribution Operations Introduction Cross Docking is a logistics practice that concerns unloading and loading materials into outbound trucks, rail cars, and trailers. The process is conducted to alter the conveyance or sort the material for different destinations while combining material from other different origins into containers or transport vehicles with similar or same destinations. Cross-docking has been in operation since the 1930s and is used continuously in the LTL (less-than-truckload) operations. In the LTL trucking business, cross docking is carried out through moving of cargo from one vehicle or container to another. The goods transported engage in the minimal warehousing process. However, in retailing, cross docking operations occur through utilizing staging areas where inbound material are consolidated, sorted and stored until the outbound shipment is ready for shipping. One of the recognized companies identified for employing the cross docking operations is Wal-Mart. Literature Review a. Purpose of Cross Docking in Distribution Operations Cross docking promotes flow-through in the supply-chain pipeline while reducing inventory buffers reliance and expediting the orders of the customers. The purpose of cross docking in distribution operations is that it increases the delivery of products just-in-time (JIT). In the distribution processes, it occurs as a warehousing practice that closely coordinates and continuously upturns the flow of information from the distributors, manufacturers and the customers. Cross docking in distribution operations also has the responsibility for ensuring that products keep moving while effectively reducing the distribution costs (Gümüş & Bookbinder, 2004). In cross-docking operations, the distributors synchronize outbound and inbound shipping activities to support the direct flow of products from the receiving areas to the shipping areas of the distribution center. Thus, the purpose of cross docking throughout the distribution operations is eliminating the necessity of picking products, storing and engaging in thorough product inspection among other warehousing activities (Gümüş & Bookbinder, 2004). Thus, it reduces the need for using the warehouses while ensuring the effectiveness of the distribution process from the receiving to the shipping area. The hub and spoke practice is also employed to assist in combining similar products that ought to be distributed to several ends while engaging in a fast and productive process (Business Logistics, 2007). The consolidation arrangements process also helps in conjoining the numerous small product loads in a single conveyance method that supports in saving the transportation expenses. The deconsolidation arrangements method contains breaking down large foods into small loads for passages that support in creating easier delivery processes to the customer. (Whitepaper Series, 2011) Throughout the distribution operations, cross-docking offers significant inventory savings as there are no costs experienced in storage (Lee, Jung, & Lee, 2006). The role of cross docking is advancing the distribution chain of some products while defining the products that need to be swiftly transported. The process of cross docking is suitable for products such as pre-picked, and pre-packaged orders from the customers from other distribution hubs of suppliers. Cross docking is also suitable for staple retail with other constant or low demand inconsistency and promotional items. Others are perishable products, high-quality items that do not need quality inspections and other pre-tagged products that are readied for the sale to customers (Yu & Egbelu, 2008). It involves minimal handling and leads to less damage of products, thus, reducing the complaints from customers. The minimal handling increases efficiency and cross docking, it allow the products to go through a least number of locations before arriving at the final target. b. Importance/Benefits of Cross Docking The profits of cross docking include how it reduces the material handling and reducing the need to use warehouses. While using the process, the distribution centers do not require large warehouse areas. Through the technique of reducing the need for storerooms, it also reduces labor costs, as there is no need for storing or packaging. It also reduces the time one uses to reach the customers and increases speed and efficiency in delivery of products (Apte & Viswanathan, 2000). Cross docking is important when products have lead-times, valuable products, and other back-ordered items. The process is important in increasing the efficiency of transporting small and slow value products among other necessities (Napolitano, 2000). The advantage of using cross docking is consolidation. Manufacturers and suppliers are mainly located in the same destinations. Consolidation in cross-dock ensures that outgoing and inbound consignments with the same or similar terminuses and other re-routing processes reduce costs. Thus, the distribution centers save a great deal due to the labor costs (Kulweic, 2004). Cross-docking increases operational and inventory efficiency in the distribution center. Cross docking involves the process of unloading products at the inbound docks that ship products easily without warehousing. It also increases the ROI of the distribution center through reducing the labor expense and accuracy that lessened the need to audit or check the quantity received among other issues. It also increases the throughput that decreases the turnaround time that supports the on-time delivery of products (Napolitano, 2000). Cross docking provides businesses with boosted efficiency in loading and unloading in the distribution center to guarantee the competitive edges. It reduces the costs through minimizing the distribution and transporting products to their targets. The businesses do not pile up many products that can increase costs through products perishing or encountering accidental damages such as a fire in the warehouses (Business Logistics, 2007). (Whitepaper Series, 2011) c. Companies Using Cross Docking Successfully Wal-Mart Wal-Mart business is one of the current companies that successfully uses cross docking operations. The business has a global procurement office and manages other operations in the business. Wal-Mart increased the recognition of the cross docking process. In using cross docking, Wal-Mart delivers 85% of its products to all the destinations it has worldwide. In Wal-Mart, cross docking has increased the economies of scale, which assist it to support the sales costs. Wal-Mart has several warehouses, where products are transported on a continual basis that increases the repackaged, sorted and distributed to the stores without having to store in the inventory (Soni, 2015). Through a satellite system, the inventories and track sales improve the Wal-Mart inventories and simplify it by reducing the unproductive inventory and managing their stocks while decreasing the pack sizes among other discounts. Wal-Mart has supplier relationships that lessen costs while it also exploits productivity. The process has also increased the Just-In-Time inventory progressions, which also moderates the carrying costs for the sellers and the retailers (Business Logistics, 2007). Cross-docking has also augmented efficiency in the distribution processes employed by the company while ensuring the direct transportation of products from the stores with minimum warehousing and handling (Soni, 2015). Saddle Creek According to Tom Patterson of Saddle Creek, cross docking has improved its speed to reduce and market the costs of mortar and brick to the markets. The process is vital since it improves the handling and warehousing of perishable products with a short life and others that are costly to store. The reduced handling of products assists in increasing the high return rates that also decrease the threat of loss or damage among others. Cross-docking has sponsored the Saddle Creek company to avoid the costs of high-value inventories while shortening the shipping cycle. The figure below presents an outline of how cross docking controls costs for the Saddle Creek Company and many others (Whitepaper Series, 2011). At the Saddle Creek, the success of cross-docking is perceived through customizing the solutions of the business, the needs of the firm are met and improved (Napolitano, 2000). Outsourcing the operations of cross docking lead to the development of the flexibility that accomplishes the demands of the market through improving the economic conditions of the market (Whitepaper Series, 2011). SAP EWM SAP EWM exists as an AG’s Supply Chain Management Suite of solutions (SAP, 2016). The corporate has an EWM (extended warehouse management) product as an assimilated software platform that is computerized and flexible in handling goods and movements to fare inventory in the granary. That is; it works with the inbound and outbound deliveries and issuing receipts among others. Cross docking simplifies inventories in the warehouses. It simplifies the multifaceted logistics while managing the high-volume in the store operations while integrating the complex supply logistics as well as distribution processes while delivering the ultimate control and visibility of the business delivery system through simplifying the logistics of the company (SAP 1, 2016). In the SAP EWM, the success of cross docking is perceived in optimizing inventory tracking, and improving distribution operations. Conclusion Cross docking is a viable and efficient strategy for controlling costs, increasing the operational efficiencies and improving service levels in the companies mainly with large supply chains such as Wal-Mart. Cross-docking has the capabilities of meeting the objectives of any business is strategically employed despite the economy uncertainty. Cross docking in distribution operations is the process of receiving and shipping products directly through less handling and warehousing. Thus, it benefits businesses in reducing the necessity for large warehouses and operating/handling costs. With minimal warehousing, the companies also have less inventory and gain through LTL consolidations. Cross docking is important due to the efficiency, flexibility and capability it has to accommodate the different changing demands of the customers and the markets at large. (Wording 1502 Words minus the headings) Bibliography Apte, U. M. & Viswanathan, S., 2000. Effective cross docking for improving distribution efficiencies. International Journal of Logistics, pp. 291-302. Business Logistics, 2007. The Impacts of Cross-docking Operation on Supply Chain Management. Hong Kong: Hong Kong Polytechnic University. Gümüş, M. & Bookbinder, J. H., 2004. Cross‐docking and its implications in location‐distribution systems. Journal of Business Logistics, pp. 199-228. Kulweic, R., 2004. Crossdocking as a Supply Chain Strategy: By Reducing Reliance on Inventory Buffers and Expediting Customer Orders, Crossdocking Promotes a Flow-Through Supply-Chain Pipeline.. Cross Docking pdf. Target Volume, pp. 1-8. Lee, Y. H., Jung, J. W. & Lee, K. M., 2006. Vehicle routing scheduling for cross-docking in the supply chain. Computers & Industrial Engineering, pp. 247-256. Napolitano, M., 2000. Making the move to cross docking: A practical guide to planning, designing, and implementing a cross dock operation. Birmingham: WERC. SAP 1, 2016. SAP Supply Chain Management/ Extended Warehouse Management. [Online] Available at: http://go.sap.com/product/scm/extended-warehouse-management.html [Accessed 7 3 2016]. SAP, 2016. The Best-Run Businesses Run SAP> SAP Extended Warehouse Management (SAP EWM). [Online] Available at: https://help.sap.com/ewm [Accessed 7 3 2016]. Soni, P., 2015. Market Realist. [Online] Available at: http://marketrealist.com/2015/02/managing-walmarts-supply-chain-cross-docking-tools/ [Accessed 4 3 2016]. Whitepaper Series, 2011. 2011 Cross-Docking Trends Report. Saddle Creek Corporation: Whitepaper Series, pp. 1-12. Yu, W. & Egbelu, P. J., 2008. Scheduling of inbound and outbound trucks in cross docking systems with temporary storage. European Journal of Operational Research, pp. 377-396. Read More