Li Choo's Group Question. When do you use Cross Docking?

First of all, i will highlight to you the main goals of cross docking

The main goals of Cross Docking are

• reduce costs
  
• improve customer services

Secondly, The process of Cross Docking.(Diagram taken from this link)

• The top right figure shows the supply chain not adopting Cross-Docking. The suppliers use less-than-truckload truckers direct to their customers.
• By using the cross-docking, the goods can be shipped by full truck loads after being sorted out in the cross-docking Distribution Centre, reducing inventory and transportation costs.

Lastly, What are some circumstances that cross-docking can be used in?

Manufacturing

For Example Toyota Motors use cross docking to consolidate their inbound shipment parts like the engine, car body etc. The parts are then sorted out and then ship out. It is a good supplement to Just In Time assembly, where there are no or minimal inventory and the lead time is short.

For more information about Toyota Motors and their cross docking activities you can click on this link.

Retail

Walmart, the oldest and noblest company who pioneered the cross docking example. By consolidating all the shipments from their retailers, they can reduce the sales cost by 2-3%. Walmart uses a hub and spoke arrangement, which i will explain later.

For more information visit this link.

Distribution

Cross-docking can be used to consolidate inbound products from different suppliers which can be delivered when the last inbound shipment is received.

Transportation

Cross-docking involves the consolidation of shipments from several suppliers (often in LTL batches) in order to achieve economies of scale.

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Hub and Spoke Arrangements

• The hub-and-spoke distribution paradigm (or model or network) is a system of connections arranged like a chariot wheel, in which all traffic moves along spokes connected to the hub at the center. The model is commonly used in industry, in particular in transport, telecommunications and freight, as well as in distriited computing. (resource link)
• The centralised hub will actually be the network host for all incoming and outbound transactions

Conditions for cross docking to be effective and efficient

• Very excellent trucking system(cross docking relies heavily on trucking)
  
• Good access to demand information along the supply chain
  
• Efficient Goods tracking technology and good material handling equipment

In Conclusion

• Cross Docking is versatile so long as your main objectives coincide with the conditions or else the cross docking will not serve its purpose in the distribution centre.
• It is important on when you use it and also how you actually utilise cross docking.
  

Best Regards,
CCM