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What are the Benefits of a Cross Dock Strategy?
A well-implemented cross-dock program can slash costs, while still meeting fill rate requirements of retailers. More specifically, cross docking allows companies to:
- Reduce distribution costs by more than 50% on the items being cross docked.
- Reduce facility operating costs. Cross dock facilities are smaller and simply cost less to operate than full-fledged distribution centers.
- Reduce inventory. When the volume and timing of supply can be managed to precisely match demand, the need for large safety stocks is eliminated.
- Reduce transportation costs. Transport mode shifts from high-cost LTL to consolidated truckload shipments that get there faster.
- Increase retailer efficiency. Retailers receive fewer, precisely timed shipments, requiring fewer dock doors and receiving staff.
Why Don’t More Companies Use Cross Dock Facilities?
Cross docking is a proven supply chain strategy, but many retailers don’t use it because, frankly, it’s hard. You need tight planning and coordination among manufacturers, carriers and 3PL partners, as well as the systems to synchronize inbound and outbound flows.
Products that offer the best opportunity for cross docking share the following characteristics:
- Have SKUs with strong, predictable demand, such as popular items, household staple items, and promotion items linked to advertising blitzes.
- Have supply sources that can provide the right product, in the right volumes, at precisely the right time.
- Receive products in “store shelf ready” condition.
Consider cross docking another tool in your logistics belt. Just like anything worth doing, it takes deliberate effort and investment. However, the numbers don't lie. Cross docking eliminates cost elements that account for over 50% of traditional warehouse distribution costs.
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