Cross Docking Essay

1067 words - 5 pages

Supply Chain News: Where does Crossdocking have the Best Operational Fit? Crossdocking can Lower Costs, but Fits Especially well with Specific Retail Scenarios; Key Operational IssuesCrossdocking or flow through distribution is a goal of many retailers, but it works better in some scenarios and for some type of goods than others.Last week, we wrote about recent crossdocking research by Dr. Kevin Gue of Auburn University, focusing on the different options for managing retail distribution, such as traditional distribution, direct store delivery and cross docking, and the pros and cons of each approach. (See Understanding Retail Distribution Models.)This week, we look at Gue's thoughts on ...view middle of the document...

Gue notes that when a "stockout" in a store does not mean a lost sale, crossdocking can become very attractive.Push distribution systems should crossdock everything that can be sold in stores now: This model is especially associated with heavy discount retailers, such as Ross Dress for Less or TJMaxx, where merchandise is acquired at a discount and everything is pushed to the stores. Customers are used to constantly changing merchandise and inventories. Gue says warehouse club stores such as Costco and Sam's Club take a similar distribution approach for many of their SKUs. When customers have a low expectation that any particular item will be in stock, it is a "perfect situation" for cross docking, Gue says.Gue adds that Ross is very good at merging incoming, crossdocked merchandise with the portion of their inventory that is placed in storage into one outbound truck for a given store, which includes a substantial price ticketing operation.If inventory costs are a concern, delay the allocation of incoming products until they arrive at the crossdock. Otherwise, allocate at the vendor to reduce material handling costs: "Because the lead time in a crossdocking system is longer than in a traditional warehousing system, demand at stores during the lead time could throw off replenishment quantities," Gue notes. "By aggregating orders to a vendor from several stores, and then making a final allocation at the last possible moment, replenishment quantities are as accurate as possible, and inventory costs are reduced."(Distribution/Materials Handling Story Continues Below) |
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By allocating at the time the Purchase Order is released, retailers can certainly gain efficiencies, using a "Mark for" UCC-128 label in which the store destination of each carton is already known when the vendor ships the goods. But as Gue notes, either demand uncertainty or the actual fill rate from the vendor could make that a riskier strategy, leading to a move to late stage allocation based on the latest demand and inventory data and exact knowledge of what is in the shipment based on the advanced ship notice (ASN). Source: Kevin Gue/International Commerce ReviewFor example, Stage Stores, a department store chain that includes under that banner along with Bealls, Peebles and other names, went to a crossdock distribution...

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