This distribution center best practice is called the cross-docking. Cross-docking is basically sending a product you are sending from one dock to another dock i.e. from the receiving dock to the outbound shipping dock directly without any intermediary processes. Cross-docking makes it so much efficient because you don’t have to send it to the reserve and then again from reserve to the active location and then pick from the active location.
In the cross-docking process the quantity needed is recognized after the case comes-in. Then recognizing that there is a need for this product with the required number of units, you will be directly sending it to the outbound dock. In the outbound dock a label gets applied and then it goes to the retail store. It’s much more common in the retail world because in the retail world you are shipping it from a DC and they are shipping to all the retail stores that they are serving so it’s okay if they ship one or two units extra. As you get it they are the only one’s shipping the product to their own stores and eventually everything gets sold in the store anyway.
In the retail world the processes that drive are called the distribution. So you are distributing from store 1, store 2, store 3, store 4 and all the way to store till 100, it’s called distributions. It’s not like a typical order fulfillment model where there is an order coming in with an order header with all the order detail and the processes that needs to go through the allocation process, that mean waving and all that. This is more like a distribution and you’re processing the allocations for these distributions to happen. Then you would pull the product to fulfill like some kind of a put to store process. In a process where you will be putting all the product that’s going into the specific issuance bay cart and moving the cart to the shipping dock. That’s how the retail process works whereas with cross-dock you can skip all these things that happen in between especially like in the following scenario.
When a case is received and it has 10 units and if there is a store that needs the exact quantity immediately it gets cross docked to the store to so it goes to the outbound dock where the label is applied and then it goes to the shipping lane corresponding to store 2 and then it goes directly to the store 2. We’re just eliminating so many unnecessary touches in the middle so that becomes a much more efficient process and in the end you can set up some flexibility in your cross-dock percentage say like you know even if it’s one or two units more you can still cross dock it but on a regular order like in a wholesale order or in an E-comm order you cannot do that. These kind of orders not needed to ship for more than what the customer has ordered both in the wholesale world as well as e-comm world.
But still you can take advantage of cross-dock to some extent because if there is a shortage, for eg. let’s say you’re trying to fulfill an order of 100 units and you had only 90 minutes and there is a 10 unit shortage. Suddenly there is a 10 unit case showing up and you can tuck it immediately and cross-dock that and fulfill against this order for the shortage that you have. In the other case if there is a replenishment that is needed in the active location you could still cross-dock that for it. All these things happen systemically behind the scenes and are accomplished for something called the immediate needs. You can create this immediate needs in the system saying connecting the shortages with the replenishment that’s needed right away. You can also connect it in some other place where you need the product, so you can create all that immediate need and then process that immediate need and push it to fulfill the order or replenish the location.
All these tasks are accomplished so fast. So cross-docking is something that you want to think about in retail. If you see obviously the retail business is going through a lot of transformation and that’s why most of the retailers have come up with their own DTC website as well and they take in orders through DTC which is easy for them to handle. The DTC business is growing three times to four times more than the retail business. I mean the retail will not go away but it is getting transformed.
There are different things that are happening in the retail segment, for eg. we would go into a store to buy stuff, but now we have better options in the online shops, from so many different brands and niche players. Because of these segment players the middleman is getting eliminated basically so the niche vendors are the one that are winning. We are going to still do online but the store is gonna change at least, as we see I don’t know how relevant this is or how useful but if you still have the old-school store model that works really well for you and I mean that’s very true in the food industry.
We still have to go to Kroger Publix to get food and grocery needs like whatever milk, eggs whatever you need. This is something to think about if you need to provide cross-dock of the product from the receiving docks to the shipping docks, so that you can eliminate the touches and you can make it much more efficient with a constant rise in throughput. Thank you for taking the time to watch this video and reading this transcript. We’d love to hear your thoughts and please share your comments in the section below.