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Introduction

Insights from industry In broad context, cross-docking is not magi-


Is there any magic in cal. However, the technique is a very powerful
business tool for supply chain management. It
cross-docking? helps to achieve the key business objectives of
stock reduction, fixed resource reduction and
more responsive operating systems. As a
Ewen Kinnear result, the practice is finding greater applica-
tion across many business sectors.
This article considers the following areas:
• What is cross-docking: who practises the
art?
• What are the basic cross-docking opera-
tional models?
• Why do businesses choose cross-docking as
a logistical alternative?
The author • What are some of the issues and opportuni-
Ewen Kinnear is the former Director, Operations Support, ties for cross-docking, now and in the
Exel Logistics, Milton Keynes, UK. He is now Logistics future?
Director of Clarks International.

What is cross-docking?
Abstract
Exel Logistics’ experience in a number of industry sectors, A simple definition of cross-docking is as
product profiles, operational techniques and technology follows: receiving product from a supplier or
suggests that the outputs of cross-docking can appear manufacturer for several end destinations and
magical, even though they result from fairly standard consolidating this product with other suppli-
operational inputs. Explains the origins of cross-docking ers’ product for common final delivery desti-
and explores the operational aspects of switching from a nations.
traditional stockholding supply chain system to a cross- The key to the process is transshipping, not
docking system, using a case study from the motor holding stock. Equally important is the
industry. States that key benefits resulting from the process of turning expensive delivery consign-
adoption of cross-docking techniques relate to improve-
ments into economic loads through consoli-
ments in service levels, inventory levels, stock returns and
dation and resource sharing. For many busi-
unit costs.
nesses it is essential to keep track of product
consignments as they progress along the
supply chain. An increasingly topical theme
for many businesses is manipulating product
into a user-friendly form for the end user.
The term cross-docking has a maritime
and railway background. From the maritime
perspective, ships would discharge cargo
“over the dock” on to smaller ships, barges
and wagons for consolidated economic deliv-
ery. The practice became popular and preva-
lent with the development of the railway
system, and especially when railways began to
carry product for industrial and private use.
Simple features included manual labelling,
vehicle manifest, integrated delivery/collec-
tion/trunking, trolleys, destination boards and
timetables. However, key cross-docking
elements were apparent: integrated resources,
Supply Chain Management
Volume 2 · Number 2 · 1997 · pp. 49–52 no stockholding, sequenced operational
© MCB University Press · ISSN 1359-8546 process.
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Is there any magic in cross-docking? Supply Chain Management
Ewen Kinnear Volume 2 · Number 2 · 1997 · 49–52

Basic cross-docking operational models Figure 2 Why is cross-docking important?

From a technical point of view, it is worth


looking at the evolution of an “intermodal
transshipment centre” which has operated in
the rail system. In its original stage, product
would move through the rail network to a
transshipment shed, trains would pull up at a
loading dock, porters would read each con-
signment label and consolidate consignments
in delivery run order. Ultimately, drivers
would convey consignments to final delivery
location and obtain a written proof of delivery.
The delivery driver would also make consign-
ment collections so that product could flow
back through the network (Figure 1).
Key cross-dock features are evident in this
only logistical tool to achieve key business
set-up:
objectives.
• shared physical resources;
Over the years many terms, techniques and
• timetables;
supporting technologies have grown up
• no stockholding;
around cross-docking. For example: consoli-
• consignment tracking.
dation, processing centres, just-in-time,
The forerunner to Exel Logistics operated product customization, satellite tracking, bar
several of these transshipment centres at sites code tracking, etc.
which included Stoke-on-Trent, Birmingham Driven down to lowest common denomi-
and London Kings Cross. The company nator the possible operational alternatives are
continues to operate out of these sites, very simple. In the cross-dock arena there are
although their procedures have, of course, two classic consignment processes:
become far more sophisticated. (1) product sort; and
Most businesses share common financial (2) final destination sort.
objectives. In short, a business usually strives
Product can flow in and out of both processes.
to increase profit and reduce working capital
(see Figure 2). Sometimes operations use both simultaneous-
The cross-docking operational model, ly. However, for definition and clarity the
allied to a capital reduction programme, following description is fairly common.
electronic stock transaction control and some In the product sort model the original send-
form of process re-engineering, will assist any ing location will despatch a complete consign-
business in achieving its objectives. A cross- ment of one product code covering all final
docking strategy will help move most of the destinations. The transshipment centre will
key business ratios in the right direction; receive a series of these product consignments
however, it is important to note it is not the and break them down into common final
delivery order (Figure 3).
Frequently in the product sort model the
Figure 1 Cross-docking: historic origins sending location lacks the time and/or space
to sort by final destination.
In the final destination sort model the original
sending location will pick and label each
consignment for the final destination at
source (Figure 4).
Clearly, if we know the final destination of
each consignment at the original point of
despatch, this can speed up the cross-dock
process. Usually a label or, at best, a bar code,
is attached to each consignment at despatch
and this label or bar code is read each time the
consignment is handled subsequently.
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Is there any magic in cross-docking? Supply Chain Management
Ewen Kinnear Volume 2 · Number 2 · 1997 · 49–52

Figure 3 Operating methodology: product sort The basic business motivations for utilizing
cross-dock techniques include increased stock
flow, reduced stockholding, improved
resource utilization and reduced delivery lead
times. Increasingly, cross-docking is used to
manipulate product into user-friendly final
delivery point order.

Case study: Goodyear GB Ltd


Goodyear Great Britain Limited is a good
example of a business which chose to move
from a traditional stockholding supply chain
operation to a stock-flow/cross-docking sys-
tem. It was combined with a version of
shared-user distribution unique in the tyre
Figure 4 Operating methodology: destination sort industry.
Until 1994 Goodyear GB operated a fairly
traditional supply chain strategy. Product
entered the supply chain from the manufac-
turing location at Wolverhampton, and
through import into one of two central ware-
house facilities. Product then moved to
replenish stock held at one of four regional
distribution centres (RDCs) at Barnsley,
Bristol, Warrington and Borehamwood.
From the RDC, product was moved direct-
ly, or through one of seven outbases, to one of
the many hundred end-user delivery points,
including leading distribution networks like
Kwikfit, ATS, NTS and Charlie Browns.
The shortcoming of this operating system
was that it required a large commitment to:
In their simplest sense these two cross-dock • dispersed stockholding;
models are applicable across almost all • capital assets – poor utilization;
business applications. • high levels of manning;
• low stock turn – high inventories;
Why do businesses choose cross-docking • high administration and logistics costs;
as a logistical alternative? • poor vehicle utilization.

Cross-dock techniques are applied universally Consequently, the supply chain was sub-
across a wide range of businesses working in optimized in terms of cost and service
many market sectors. Within the UK, specific potential.
examples are found in the automotive, food Goodyear GB, in conjunction with Exel
and retail sectors, covering products in a Logistics and others, developed some clear
diverse range, from fruit to headlamps, and business objectives which would derive from a
across all temperature ranges. new stock-flow/cross-docking system:
In each case similar basic issues recur, such • allow rationalized central warehousing;
as: • consolidate overall stock levels;
• product labelling; • maximize stock visibility;
• containerization; • 100 per cent next day delivery;
• product handling; • improve operating system flexibility –
• information transfers; especially high/low flows;
• process timetables; • develop core sales/manufacturing focus;
• product consolidation; • deliver acceptable cost reduction –
• resource utilization. warehousing and transportation.
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Is there any magic in cross-docking? Supply Chain Management
Ewen Kinnear Volume 2 · Number 2 · 1997 · 49–52

In short, the business decided that it would trunk vehicles to the relevant cross-dock
work to improve the lead time from manufac- centre – Kings Cross, Bristol or Warrington.
ture to point of sale, at significantly reduced The cross-dock centre will then systemati-
unit cost and reduced pipeline inventory cally break down each product consignment
costs, while improving future operational receipt across final delivery points between
flexibility. 1.00 a.m. and 5.00 a.m. for next day delivery.
Because of time and space restraints at the The trunk vehicles collect return pallets and
Wolverhampton Central Distribution Centre, product from each cross-dock centre, includ-
ing a high volume of work trunk casings for
Goodyear GB decided to choose the product
reprocessing. At the cross-dock centre
sort dock model at Break Bulk Centre level.
Goodyear GB utilizes supplier property,
Each day the central warehouse would consol-
vehicles and human resources.
idate that day’s orders in product categories
Against its initial objectives, Goodyear GB
covering all outlets within a distribution
has achieved the following outputs:
region, and despatch bulk product loads to • Service level. Next day UK, from 87 per
other regions. The receiving cross-dock centre cent to a mean average of 96 per cent.
would then break down and sort each bulk • Stock hold. An overall inventory reduction
consignment across all relevant final delivery of 16 per cent on value.
locations within that distribution region for • Stock return. An improvement of 14 per
next day delivery. cent.
Goodyear operates a central sales order • Property. The release of more than 12,500
processing facility called Tyreline. Orders are square metres (135,000 square feet) of
captured between 7.00 a.m. and 5.00 p.m. warehousing.
each day. The traffic and warehousing func- • Vehicles. The release of all contract hire
tions produce a provisional operational plan commitments.
between 2.00 p.m. and 4.30 p.m., considering • Headcount. A useful reduction contribu-
picking requirement, trunk requirement and tion.
delivery resource requirement. This plan is • Unit cost. Reduced operating costs in real
confirmed at 5.15 p.m. terms by over 12 per cent.
After the operational plan is confirmed, the Goodyear GB’s physical operations can now
central warehouse picks in product code order handle volume fluctuations with less fixed
between 6.00 p.m. and 10.00 p.m.. Tyres are cost penalty and with improved service levels
then moved in a series of scheduled night and accuracy rates.

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