Crossdock Warehouse - What drives its necessity?
Sometime ago, I had visited a warehouse in New Jersey which took me by surprise. From the outside it looked like a long barrack with a large number of dock doors and from the inside, it was a lot strange. There were no aisles, bays, levels or locations for storing goods. Instead there was a conveyer system that was used to receive goods from the receiving dock door and to move them to a work area where the pallets were de-palletized. The resulting cartons were then loaded into smaller trailers stationed at the shipping dock doors. This was not a warehouse in the true sense, but what warehousing science would call it a 'Crossdock Warehouse'.
Well, even a warehouse can have cross docking facilities provided it stores items that need to be cross docked. However, the instance for of this activity to occur would be far less than that in a dedicated crossdock warehouse. Cross docking in regular warehouse would occur when a shipment consisting of full or partial items in an order have been received and there is a trailer available at the dock door which is on the same delivery route as that of the shipment being received. In such a case the shipment, instead of being unloaded, received and putawayed, is moved directly to the crossdock area and loaded on the awaiting trailer.
Now the question is why do we need to have a dedicated cross dock warehouse? How do we benefit from one? How does it differ from a regular warehouse?
The need for crossdocking arises when multiple shipments from different retailers are shipped in one trailer. At the crossdock warehouse, these shipments are unloaded, sorted and then loaded into trailers destined to the stores to whom the shipment needs to be sent. Thus an additional activity of sorting may take place at such a warehouse. This allows multiple shipments to be transported in a single truck (full truck load), instead of sending less than truck load, thus saving transportation costs.
However, there would be a good number of MHEs (Material Handling Equipments) like forklifts, conveyers that would be used immensely to move pallets/boxes from receiving docks to shipping docks. You will also find that a cross dock warehouse will have a large number of dock doors, both for receiving and shipping when compared to a regular warehouse. Also, the distance between the receiving and shipping doors is kept at a minimum so that the travel time while moving goods from the inbound trailer to the outbound one is considerably reduced.
A major challenge for cross dock warehouses is appointment scheduling of trailers for both inbound and outbound trailers, since there is a big traffic of trailers arriving and leaving the warehouse at any giving point of time, which is a challenge to dock door schedulers.
Other advantages include minimum or no inventory hence no dedicated locations to store SKUs, thereby reducing additional infrastructure cost to build racking systems. Also, since there are no putaway and picking operations, there is a considerable cost saving due to minimum labour utilization. Some crossdock warehouse also facilitates in-transit shipment bundling, which means receiving knock down kits from various OEM vendors and bundle them into a single shipment. For e.g., parts of a machinery received from multiple manufacturers are bundled and shipped to an assembling unit where they are finally assembled.
The question to debate is how strategically a crossdock warehouse needs to be physically located down the supply chain, in order to achieve maximum savings in terms of cost, time and effort. One of the driving factors that comes to my mind is to determine the number of retailers supplying goods to a particular route that would require their respective shipments to be de-palletized (in case items are shipped in pallets) and sorted before being shipped to their respective destinations. Also, there need to be a good number of trucking companies that would provide services on the same route where the cross dock warehouse is proposed to be located. Are there any other pre-requisites that you can think of?