Cross Docking

Supply Chain News: Where does Crossdocking have the Best Operational Fit? Crossdocking can Lower Costs, but Fits Especially well with Specific Retail Scenarios; Key Operational IssuesCrossdocking or flow through distribution is a goal of many retailers, but it works better in some scenarios and for some type of goods than others.Last week, we wrote about recent crossdocking research by Dr. Kevin Gue of Auburn University, focusing on the different options for managing retail distribution, such as traditional distribution, direct store delivery and cross docking, and the pros and cons of each approach. (See Understanding Retail Distribution Models.)This week, we look at Gue's thoughts on where the crossdock model usually has its best fit, and keys to making it a success. SCDigest Says: |

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Poor material handling practices can eat away at much of the potential crossdock savings. What the level of automation should be, especially for crossdocking at the carton level, is a key management decision.. |

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So where does crossdocking have the best fit in terms of retail distribution? Gue offers several guidelines:Use crossdocking for products with high, stable demand: If demand is fairly constant, then the inventory serves little purpose, and the product is a good candidate for crossdocking. If demand is highly variable or the cost of a stockout is high, then traditional warehousing is probably the best strategy, Gue says.Use crossdocking for products for which customers are willing to “wait a few days”: This is typical for larger purchase items such as major electronics or appliances. In fact, crossdocking is an essential strategy of Whirlpool's totally redesigned distribution network, enabling the appliance giant to deliver washers and refrigerators to every household in the US in just two days. Gue notes that when a "stockout" in a store does not mean a lost sale,...