Cross-docking, or transshipment, is a method that essentially supports distribution processes. It involves reloading and shipping goods to the recipient immediately after they are delivered to the warehouse, without the need for storage. The essence of cross-docking is to collect goods from many points in one place or, conversely, to receive shipments from many points and deliver them to a single recipient. In most publications, the cross-docking method is reserved for the goods distribution stage, while little attention is paid to organizing deliveries using cross-docking for the entire supply chain, starting from the supply of materials, raw materials, or semi-finished products for production.
Rapidly changing market conditions and high competition require companies to respond to demand as quickly as possible, triggering a reaction from all participants in the supply chain. Such market operating conditions force companies to use methods that effectively allow for shortening the duration of flows in supply chains. Cross-docking is one such method. Its most important feature is the ability to bypass warehouse processes, with all operations performed in the dock areas. This method requires very precise synchronization of all goods receiving and issuing processes. Cross-docking can be implemented at three levels:
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cross-docking of full pallets, where full pallets of a homogeneous product are directed directly to the store (used primarily for high-volume products)
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cross-docking of store orders completed by the supplier – a less frequently used method consisting of the manufacturer completing and sending goods directly to stores (the manufacturer must know the demand of each store)
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cross-docking with picking at the transshipment point – this is the most commonly used practice and involves delivering full pallets of the same product to a Distribution Center, where products are then picked and completed for specific store orders (there remains a working stock that is used the next day).
Cross-docking is a method supporting the effective implementation of the ECR (Efficient Consumer Response) strategy at the supply management level in the supply chain. Improvement in the speed of delivery directly affects the competitiveness of companies supplying products to the market. The essence of this technique for the ECR strategy stems directly from the possibility of improving the flow of frequently sold products with relatively constant demand at low costs of lost sales.
In supply chain management, time has become the primary determinant of competitiveness and efficiency, being one of the most important components of logistics costs. Logistics costs associated with the flow of goods in the supply chain increase as lead times and delivery times lengthen. Therefore, at this level, one can also see the great importance of using cross-docking, thanks to which efficiency and speed of delivery are obtained without unnecessary loss of time.
Case study
SIEGENIA-AUBI Sp. z o.o. is a company in the field of modern hardware and construction technology with an international reach and a long tradition. Part of the company’s success is, among other things, innovation in technological processes and management methods, as well as partnership relations and cooperation in the supply chain.
In the case of SIEGENIA-AUBI Sp. z o.o., we are dealing with a rarely encountered cross-docking solution, because it concerns not distribution but production supply. The company was able to decide on such a solution thanks to close cooperation between material suppliers and due to the fact that the main material suppliers are located in Germany, Switzerland, Austria, and Italy, with about 80% of suppliers located in the Ruhr area in Germany. They supply materials for production in relatively small batches and in frequent delivery cycles. Such a solution results in lower inventory levels, and thus lower costs and better financial liquidity. In the case of SIEGENIA-AUBI, cross-docking of full pallets or containers is used, which go from many suppliers to a transshipment point located in this area. The cross-docking model at SIEGENIA-AUBI is shown in Figure 1.
The handling of deliveries between the Transshipment Point in Germany and the Production Warehouse in Kluczbork by a logistics operator is described below.
The article comes from the magazine “Logistyka” 4/2011.