LOGISTICS AND

SUPPLY CHAIN
MANAGEMENT

Day 6: Cross-Docking, Efficient

Consumer Response

Dr. Ramil David Solis, DBA

Professor
2024 JAN
 TOPIC PRESENTATION

Cross-Docking, Efficient
Consumer Response
• Cross-Docking Definition
• Types of Cross-Docking
• Purpose of Cross-Docking
• Advantage and Risk of Cross-
Docking
• Industries that Used Cross-
Docking
 Operational tactic that moves objects
through consolidation centers or cross
docks without putting them into
storage space

Explains the procedure of receiving goods

What Is through an inbound dock and then

transferring them across the dock to the

Cross- outbound shipping dock.

Docking? Reduces inventory and operation costs

by eliminating unnecessary handling
and storage.

Also considered a just-in-time(JIT)

shipping method that skips over the
step of warehousing products after
they leave the supplier
Cross-Dock Operation Process
Figure 1
Cross-Docking Explained
• It was pioneered by the trucking industry in the 1930s
as a way to improve efficiency.

• It involves directly transferring goods from inbound to

outbound shipments at a logistics facility without the
need to place the goods in storage.

• The strategy is called cross-docking because goods

"cross the docks," moving from vehicles that arrive at a
receiving dock to vehicles that accept the goods at a
shipping dock.

• This method is widely used for supply chain

management by companies that need to move high volumes
of goods quickly, especially if those goods are perishable.
Cross-Docking Explained
Because cross-docking speeds delivery times.
• Example: Supermarkets, use cross-docking to move
foods quickly from farms, factories and other suppliers
via distribution centers to retail stores.
• Truckloads of produce arriving from farms are split, re-
organized and combined with goods from other
suppliers to create outgoing truckloads of products that
are then shipped to individual stores.
• Many companies perform cross-docking at specialized
docking facilities located near major transportation
hubs, such as seaports and airports.
• These cross-docking facilities are typically I-shaped,
with inbound docks on one side and outbound docks on
the other.
• This configuration maximizes the number of docks that
can be used by vehicles at one time while minimizing
the distance between receiving and shipping goods at
the facility.
Figure 2
 • pre-distribution cross-docking
Two Main • post-distribution cross-docking.
Methods of These are effective logistics methods for retailers and distributors
Cross- looking to streamline their supply chain and improve efficiency.
docking The choice between the two methods ultimately depends on the
specific needs and goals of the company.
v Pre-distribution cross-docking is a
logistics method that involves quickly
moving goods from suppliers to end-
customers with very little time spent in
the cross-docking warehouse.

ü This process is best suited for retailers that

manage their own warehouses and have
direct insight into their customer and supplier
relationships.

ü The retailer can quickly move the goods

through the cross-docking facility and onto
their final-destination.

ü This results in reduced inventory holding

costs and faster delivery times.
v Post-distribution cross-docking involves
storing goods at the cross-docking facility
until the next leg of the journey is clear.

ü This process allows for distributors and

retailers to take the time needed to
strategically decide where to ship the
inventory based on inventory forecasting
and current inventory counts.

ü This can result in increased inventory

holding costs but provides more
flexibility in the distribution process.
Other Types of Cross-Docking
Purpose Cross-docking
ü is a logistics technique that aims to accelerate goods delivery
and increase supply chain efficiency.

ü It involves unloading goods from vehicles making incoming

shipments at a logistics facility and transferring them to
vehicles handling outgoing shipments, requiring little or no
storage time in between.

Objectives of Cross-docking
ü It eliminates the put away process and directs the product to
shipping.

ü Decreasing order fulfillment time is essential when

suppliers are slow to deliver, or manufacturing is behind.

ü It minimizes handling time and storage time

 Advantage of Cross-Docking

By cross-docking, businesses can experience several advantages.

A . Cost savings

By cutting back unnecessary warehousing operations, businesses can reduce

expenditures on warehouse real-estate and the associated costs, including
climate control, lighting, maintenance, and labor costs. In addition, by
delivering products in a just-in-time fashion, businesses avoid the age-old
problem of inventory depreciation.

B. Improved material handling

By removing redundant picking and packing steps, businesses reduce the

opportunities for product damage. Furthermore, with items remaining in
open staging areas, workers can inspect orders to ensure damaged products
are not sent out.
C. Speed of delivery

• Cross-dock operations not only boost

efficiency by eliminating unnecessary touches,
but distribution centers are strategically located
near customers for timely dispatch and delivery.
With faster dispatch and delivery, businesses can
achieve improved customer satisfaction.

D . Capacity

• While cross-docking reduces the need for

warehouse space, it brings the need for more
terminal and dock space, as well as more
transport vehicles. Distribution centers must
have the facilities, know-how, and technology to
make this work.
E. Precision

• Trading bulk orders and bulk storage in favor of

smaller JIT shipments requires a great deal more
precision. Companies must be able to track individual
items throughout the supply chain at the speed of
travel. Getting the right products to the right place
will require well-trained personnel, carefully planned
storage space, and accurate order tracking software.

F. Control

• Organizations that don’t have a well-built shipping

and logistics arm will find it necessary to entrust this
function to a cross-docking operations services
provider. This entails relinquishing some control after
orders are handed off. A trustworthy partner with
integrated systems will be key in maintaining the
visibility of operations and quality of service.
Dis-Advantage of
Cross-Docking
a. Process Is Time-Consuming: To be successful, cross-
docking needs to be properly planned and executed. This
can help prevent any scheduling conflicts and other
mishaps that can happen when warehouse management
systems are not in place. Shipments should not spend
more than 24 hours in a warehouse or distribution center..

b. It’s Expensive: Setting up a cross-docking operation

isn’t cheap. You would have to have access to a lot of
capital to set up dock terminals and purchase a large
number of transport vehicles to service your business.
Risk of Cross-Docking
• Despite its many advantages, cross-
docking comes with some risks.

• It takes considerable planning,

investment and sustained effort to set up
and maintain an efficient cross-docking
facility.

• Cross-docking also requires good

visibility into supply and demand, as well
as coordination with other companies
within a supply chain.

• Here are some of the main risks to

consider:
Initial investment.

• Significant planning is required to

design and build specialized cross-
docking terminals that meet companies’
needs.

• Since the goal is to transport goods

quickly and efficiently, companies
often invest in warehouse automation
technology, such as conveyer belts and
robotics to help move goods around the
facility, as well as sensors and other
tools to track their movement.
Supply chain vulnerability.

• Supply chain reliability is critical for

businesses.

• Because companies hold less inventory in

warehouses, they can be more vulnerable to
unexpected supply chain disruptions.

• Any interruption to the flow of goods

from suppliers can mean companies quickly
run out of goods to sell to customers.

• Real-time inventory
management technology can help
companies keep tabs on their current
inventory and ensure that they maintain
adequate supplies of critical goods.
Demand forecasting errors.

• At times businesses may miscalculate

the volume of products their customers
want and come up short because they
haven’t kept excess inventory in storage.

• Accurate demand forecasting is

crucial to ensure that supplies are
received and available when customers
want them.
Coordinating carriers and supply chain
partners.

• Cross-docking requires close coordination

across the entire supply chain.

• A company must ensure that its suppliers can

deliver inbound goods when it needs them and
that it has enough outbound carrier capacity at
exactly the right time to move the goods out of
the cross-docking facility as soon as they
arrive.

• Enterprise resource planning (ERP)

systems with comprehensive supply chain
management capabilities can help companies
forecast demand and ensure they’re able to meet
customer needs in a timely manner.
Industries that Used
Cross-Docking
• Cross-docking can be an extremely
beneficial operational system. However,
specific industries reap more rewards from
cross-docking than others.

• Here are the most common types of

companies that use cross-docking:
• Food and Beverage Industry:
Restaurants need a steady stream of
supplies to operate smoothly. Cross-
docking decreases the chances of any
food spoilage because products move
quickly through the supply chain, with no
storage involved.

• Consumer Goods: Due to big- named

brands like Amazon and Walmart most
consumers expect goods in hand
immediately. Businesses now need to
keep up and offer the same services
consumers have grown accustomed to.
Cross-docking helps companies move
items faster and avoid costly storage fees.
• Automotive Industry: Cross-docking
has been a staple of the automotive
industry for decades because it relies on
just in time delivery. This means that the
production process only begins when a
customer places an order and inventory
stock is delivered as needed.

• Chemicals: Chemical products have

specific storage requirements, making
them both expensive and dangerous to
ship. They should be handled as
minimally as possible and be sent directly
to the customer, which cross-docking
allows.
 Check list
for proper
cross-
docking
 Check list
for proper
cross-
docking
 Efficient Consumer
Response is All About
Going Beyond the
Overview of
Customer’s Value
Efficient Expectations
Consumer
Response
 What is efficient customer
response ECR in SCM?

• Whether a company can survive depends

on whether the company can provide
customers with higher values.

• “ECR (Efficient Consumer

Response)” is a strategy to increase the
level of services to consumers through
close cooperation among retailers,
wholesalers, and manufacturers
Efficient Consumer Response has
advantages for all members in the
supply chain. Some are general
advantages resulting from

• overall improvement in efficiency of

the supply chain.

• stem directly from the specific

strategies used to implement ECR.

• improving the efficiency of the supply

chain and reducing costs.
Strategies in the
implementation of efficient
consumer response ECR

ECR makes supply chain more

competitive as well as bringing value to
the consumer.
They include:
ü efficient store assortment,
ü efficient promotion,
ü efficient product introduction and
ü efficient product replenishment
(Kurt salmon associates, 1993).
Efficient assortment

• ensures that the range of products carried by a retail store satisfies the consumer

• that store space is utilized efficiently to increase retailer and supplier profitability.

• the potential to significantly help supply chain members reduce costs.

Efficient replenishment aims to provide

• At the right product,

• At the right place,

• At the right time,

• At the right quantity, and

• At the most efficient manner possible.

Ø Efficient Consumer Response component is

supported by a free flow of accurate and timely
information, integrated with the flow of product,
throughout the grocery supply chain.

Ø Efficient replenishment can be most beneficial to

the grocery industry where channels of distribution
are rather long.
Efficient promotion,

• ensures that trade promotions and

• consumer promotions used by members are

more cost efficient.

Efficient product introduction

• ensures that manufacturers, wholesalers,

retailers, and consumers collaborate
together closely to develop better products
quicker and less expensive.

• marketplace is exposed to an extremely

large number of new products;

• since products could be returned,

• wholesalers and retailers made little effort

to stock only those products that met
consumer needs.
 The barriers to ECR implementation can be grouped
Perceived Barriers
into two categories:
in Efficient • (1) the lack of capabilities (both skill and
technology related) and
Consumer
• (2) the attitudes of wholesalers, retailers, and
Response manufacturers toward collaboration and the attitudes
of company personnel.