physical distribution channels

direct shipping

no warehouse or cross dock center : direct from manufacturer to retailer

most suitable for:

• difficult to handle products

• make to order products 

• products with very short shelf life

warehousing

decoupled inventory

1 central or N central:

central = risk pooling → inventory pooling → lower inventory → lower safety stock

Cross (X) Docking

logistics technique that eliminates the storage and order picking functions of a warehouse while still allowing it to serve its receing and shipping functions

→ moving products directly from inbound vehicle to outbound vehicle, without decoupled storage in between 

• you exactly order the products for which destination is already known 

2 types of cross docking

• pre sorted operations (pre distribution) suppliers prepare shipments, including packaging, barcoding, labeling, pricing, before leaving the cross dock facility

• Pick to zero operations (post distribution): order picking for customers carried out at the cross-dick facility

when to cross dock?

Suitable for products with: 

• high and predictable demand

• high inventory holding costs

• lead time sensitive products (perishable products)

Requirements for success of cross docking

• Advanced information systems integrated across the supply chain

• Effective and timely information sharing

• Fast and responsive transportation system (with sufficient vehicles and full loads)

Advantages of cross docking

Advantages compared to warehousing (similar to direct shipping)

• Inventory and space reduction

• Reduction of obsolescence cost (risk)

• Shorter lead time, especially for perishable goods

Advantages compared to direct shipping (similar to warehousing):

• Reduction in transportation costs

manufacturing cross docking

receiving and consolidating inbound supplies to support Just-In-Time manufacturing

distributor cross docking

onsolidating inbound products from different vendors into a multi-sku pallet, which is delivered as soon as the last product is received

trabsportation cross docking

consolidating shipments from di erent shippers in the LTL and small package industries to gain economies of scale

retail cross docking

receiving product from multiple vendors and sorting onto outbound trucks for di erent stores

opportunistic cross docking

in any warehouse, transferring an item directly from the receiving dock to the shipping dock to meet a known demand