Ryder - January 2016 (LM)

"Using Cross-docking to Bridge the 'Final Mile'"

In a time when consumer demand is forcing retailers to get their products to market faster, a growing number of shippers are looking to non-traditional practices to help reduce the amount of time it takes to process orders and route products. Research shows the average company spent $48 million on freight services in 2015 and nearly 20 percent of firms spent more than $100 million. As eCommerce and omni-channel have become the become the key focus points in the retail industry, the need for streamlining warehouse and distribution center (DC) operations is becoming more evident.

One practice taking the supply chain industry by storm is cross-docking — a distribution system where items received at the warehouse or DC are not placed into stock, but instead are prepared for shipment to another location or for retail stores. Once received at the warehouse or DC, the materials are sorted, consolidated, and loaded immediately onto outbound trucks, trailers, or railroad cars. Often viewed as an alternative to traditional warehousing, cross-docking uses the DC as a “sorting center,” where materials pass through, but are never held in inventory. Crossdocking can realize a cost reduction by skipping stocking and retrieval steps.

Roughly one-half of today’s shippers use cross-docking, but another 40 percent either has no plans to use it, or, are unfamiliar with the practice. The strategy can be used in various applications and settings. From the manufacturing perspective, crossdocking consolidates inbound shipments and supports just-in-time assembly strategies. For distributors, it is used to more efficiently receive incoming shipments and then orchestrate deliveries once the last of those shipments is received. 

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