Cross-docking is a process by which finished oods from the manufacturing source are taken and delivered directly to the customer with little or no handling involved in between. Cross-docking is applied to a number of circumstances in the mate- rial handling process. In manufacturing cross-docking is used to consolidate in-bound supplies which are then prepared to support just- in-time assembly. In the distribution scenario, cross-docking is used to consolidate in-bound supplies of products from different sources/sup- pliers which are delivered when the last in-bound shipmentis received. In transportation, cross-dock- ing is used to consolidate shipments from many suppliers, often in Less Than Truck Load (LTL) batches, in order to achieve economies of scale. In retail, cross-docking involves receiving merchan- dise from multiple suppliers and consolidating by way of sorting them to out-bound shipments to different stores. Cross-docking involves the reduction of han- dling and storage of inventory and the con- ventional process of filling the warehouse with inventory before shipping it to various locations is virtually eliminated, when an organization uses the cross-docking concept. In essence, cross- docking means receiving goods at one end and shipping out through the other instantaneously without allowing storage. Thus cross-docking brings about a paradigm shift from ‘supply chain’ to ‘demand chain’. For example, the merchandise coming into the cross-docking centre is already pre-allocated for a replenishment order gener- ated by a retailer in the supply chain. Thus cross- “docking enables the retailers to streamline the supply chain from the source point to the point ‘of sale. Cross-docking always helps reduce direct ‘costs incurred as a consequence of holding excess inventory by eliminating unnecessary handling and storage of merchandise. As products would move continuously, cross-docking would result in, almost nil product damages and nil losses due to product obsolescence. In a conventional distribution and logistics function goods are received and stored in a distri- bution centre and often these goods remain there until ordered by the store. In such a scenario ship- ments ordered are often Less Than Truck Load. Cross-docking now allows for continuous move- ment of goods as they are pre-assigned to a store and the distribution centre also sorts merchandise to be shipped to a consolidated batch including many orders from many other suppliers to the stores. This often provides for Full Truck Loads (FTL). Cross-docking works seamlessly with one set of workers receiving goods on pallets in lanes corresponding to the receiving doors, a second set of workers sorting pallets into shipping lanes from which a third team loads them into out- bound vehicles. Walmart is said to use the concept of cross-docking efficiently and the company deliv- ers about 85 per cent of its merchandise using the cross-docking system. The system runs in such a way that shipments typically spend less than 24 hours in the distribution centres, some- times even less than an hour. Goods are con- tinuously replenished to Walmart stores within 48 hours by using the cross-docking system with- ‘out having to store merchandise anywhere. The company-owned transportation systems also help Walmart in the speedy replenishment pro- cess which facilitates just-in-time replenishments where goods from the warehouse are moved to the store in less than 48 hours every time. The cross-docking locations are also planned in such a way that distances are managed with ease to achieve such time-bound goal for replenishments. Cross-docking allows Walmart to replenish their shelves 4 times faster than its competition.Distribution center Suppliers Before cross-docking ‘Suppliers. | un i {Less than tll i truck toad) \i | a sit | Receiving es) Sorting = - : 7 ‘After cross-docking Shipping =a Tq ee ! st aa) [ao n ee oe (Fut ruck foac) Cross-docking : oc | TL SH x OOO Customers wD) Walmart has invested a great deal in this unique cross-docking inventory system which has ena- bled the company to achieve economies of scale and reduce costs considerably. The company also has invested in state-of-the-art technology that can track stocks and movement of merchandise. This keeps the organization up-to-date with informa- tion pertaining to sales and inventory. Walmart had implemented a satellite network system which yl | 4 QUESTIONS FOR DISCUSSION 1. Explain the cross-docking system and its applica- tions in supply chain management. “2. What are the benefits of cross-docking? enables sharing of information among the compa ny’s wide network of stores, distribution centres and suppliers. Cross-docking techniques adopted in Walmart have been delivering optimal efficien- cies and results for the organization. The imple. mentation of cross-docking at Walmart has become a model globally for other organizations | to follow. ee 3. How does cross-docking work better than mie rial handling in the conventional distributs” system? 4. How does cross-docking help Walmart in 4° ing efficient replenishments? hie