The Benefits of Cross Docking

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Cross-docking – the practice of receiving product and immediately shipping it out without putting it in a 3PL warehouse – is increasingly valued by companies in fast moving industries, because it allows products to reach destinations faster and more economically.  It’s also used by industry leaders, who have recognized the roll cross-docking can play in delivering just-in-time services.

Cross-docking is on the rise, according to the 2011 Cross-Docking Trends Reports.  More and more companies are finding added value in the practices ability to lower costs, manage inventory, accommodate customer’s demands, and increase transportation efficiencies. 

There are several methods of cross-docking. For instance, products can be received and then immediately loaded outbound without being placed in the 3PL warehouse. They also can be received and staged on the dock, and then be loaded outbound later. Another approach is to receive products, reconfigure the shipment, and then stage on the dock for an outbound later.

By eliminating the put-away process, companies reduce 3PL warehouse requirements and inventory levels.  They also consolidate freight to reduce transportation costs and improve product availability.  Given that demand is increasingly volatile, it comes as no surprise that cross-docking continues to gain favor. Indeed, companies increasingly implement cross-docking as a means to reduce costs, manage inventory levels, increase efficiencies and accommodate unpredictable customer demand,

Cross-docking has increased significantly in the past three years.  The survey completed by The Cross-Docking Trends Reports shows an increase of 16.5% in three years.  68.5% of the companies surveyed are currently cross-docking.  Cross-docking is a viable strategy for adapting to current economic times. 

The biggest benefits of cross-docking are reducing transportation costs, consolidating shipments, and overall improvement in service.  More and more companies are recognizing the value and are looking to outsource the cross-docking service. 

There are considerable savings for those doing the cross-docking. Since products aren’t actually put-away, companies reduce on 3PL warehouse labor. Furthermore, by consolidating LTL shipments into full loads, companies are able to improve transportation efficiency and reduce their fuel costs.

 

What is Third Party Logistics?

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Third-party logistics – (abbreviated 3PL) describes businesses that provide one or many of a variety of logistics-related services.  Types of services would include public warehousing, contract warehousing, transportation management, distribution management, and freight consolidation. A 3PL provider may take over all receiving, storage, value added, shipping, and transportation responsibilities for a client and conduct them in the 3PL’s warehouse using the 3PL’s equipment and employees, or may manage one or all of these functions in the client’s facility using the client’s equipment, or any combination of the above.

Third party logistics providers typically specialize in integrated operation, Chicago warehousing and transportation services that can be scaled and customized to customers‘ needs based on market conditions and the demands and delivery service requirements for their products and materials.

Hertz and Alfredsson (2003) describe four categories of 3PL providers:

  • Standard 3PL provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity.
  • Service developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
  • The customer adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small.
  • The customer developer: this is the highest level that a Chicago 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.

Benefits of a 3PL

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Diversified Entities (DE) is a third party logistic warehouse facility. Third-party logistics  (abbreviated 3PL) describes businesses that provide one or many of a variety of logistics-related services.  Types of services would include public warehousing, contract warehousing, transportation management, distribution management, and freight consolidation.   DE manages and implements a range of logistics functions, using its own assets and resources on behalf of other companies. It is becoming an ever increasing trend to outsource warehousing and distribution operations, to take advantage of lower total costs, better quality and efficiency offered by specialized 3PL providers.

DE can offer tailor made logistics solutions, that can lead to improvements in areas such as, customer satisfaction,  financial performance,  reduced lead times, and meeting market demand effectively.  Most of all, we offer flexibility and a wide range of experience.

DE offers a broad range of services, all with the goal to satisfy each customer’s unique requirements. DE’s current Chicago 3PL offering includes the following:

  • Storage and Inventory Management
  • Order Fulfillment
  • Freight Management
  • Silliker Certified
  • Food Grade Warehouse
  • EDI Processing
  • Rail Sided – 7 Rail Sided Doors
  • 50 Outside Dock Doors
  • Racked Storage
  • Intermodial Ramp Access and Container Processing
  • Transloading – Inbound / Outbound Via Rail
  • Picking & Sorting
  • Letter Shop Services
  • Stretch Wrapping, Kitting, Pallet Exchange
  • Inbound and Outbound Order Consolidation
  • Lift Truck / Slip sheet / Clamp and Box Equipment
  • Floor Loading / Hand Unloading and Palletizing