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Cross-Docking Gains Popularity in Distribution Centers and Warehouses

While many operations look to cross-docking as a cost saver, DC managers must tread cautiously. More than one company has set up a cross-dock only to reverse course.

(Boonton, NJ, March 22, 2012) — In the category of everything old is new again, companies are embracing cross-docking as a way to cut transport costs and lighten inventories.

"There seems to be renewed interest in cross-docking," says Thompson Brockmann, principal at Tompkins International. "One of the biggest drivers is reducing inventory."

While many operations look to cross-docking as a cost saver, DC managers must tread cautiously. More than one company has set up a cross-dock only to reverse course, says Fred Kimball, principal at Distribution Design.

He tells companies to consider factors such as the complexity of their picking operations, their stockkeeping unit count, and whether they account for inventory by the first-in/first-out method. A company such as Coca-Cola that moves mostly uniform products can cross-dock more successfully than one that handles a wider variety of products.

"The greater the complexity of the operation, the more challenging it is to cross-dock successfully," Kimball says. "The moment you have to open up that case of six dozen T-shirts and take out three T-shirts, you're dead in the water."

Despite those limitations, cross-docking works well in the right situations, says John Vogt, president of the Houston Roundtable of the Council of Supply Chain Management Professionals and director of global logistics at Halliburton.

"It is slowly but surely growing," Vogt says. "It's the ability to tie suppliers to a store with the lowest inventory, the fastest move, and the lowest overall cost."

Thompson, Kimball, and Vogt provide strategies for cross-docking success in the March issue of Distribution Center Management.

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