Crossdocking: The Latest & Greatest
Retailers continue to emerge as trailblazers when it comes to crossdocking. Just think about the type of distribution facilities that they've been building—more dynamic flow-through rather than static storage. And it's all based on retailing's basic premise: You can't make money until the product is sold at your stores.
And getting product rapidly to those stores is exactly what cross docking aims to execute to perfection. By dispatching inbound merchandise directly to outbound shipping, crossdocking minimizes the amount of time goods spend in non-value-added DCs and thus maximizes their speed to market.
Companies that crossdock not only eliminate wasted time moving product to and from storage, but they also cut down on capital-intensive inventory by shipping immediately to fulfill customer demands.
Some degree of automation is typically needed from both the software and the equipment perspective. Here are the latest developments, innovations, and breakthroughs that have made crossdocking easier and faster.
Smarter software
Recent developments in information systems and software solutions have created more opportunities for crossdocking, allowing for more visibility in the supply chain and improved data sharing between trading partners. Here are three new software capabilities:
- More opportunities. Older systems were only able to do simple, “pure” crossdocking. Only if it was a perfect match of the entire license plate going directly to an outbound shipping door would that product be considered as an opportunity to crossdock. Software provider Manhattan Associates has taken it to the next level by allowing orders, and even order lines, to be split. “To avoid starving inventory at store shelves, most retailers prefer shipping half of that order line immediately rather than shipping none,” explains Eric Lamphier, Manhattan's senior director of product management. If only one, instead of two cartons, of a popular electronic hamster toy is received, the system automatically splits the order and allocates that one carton immediately for crossdocking.
- Sending electronic notices from around the world. Conducting computer-to-computer business transactions over the Internet has become commonplace. By allowing access to Web-based portals, software providers have enabled suppliers to create and transmit Advance Shipment Notification (ASN) information to their retail customers. An ASN is an electronic file transmitted from suppliers to retail customers, providing advance notice of whatproducts are being shipped to the retailer's DC and their estimated time of arrival. It facilitates crossdocking by automating the receiving process, allowing for allocation of a product even while in-transit, and by providing DC managers with a heads-up when planning resources for inbound receipts. Managers are realizing greater visibility in their supply chains and are now able to make better decisions—especially in the case of the unexpected. “When a shipment is held up at the port,” says Prashant Bhatia, director of solutions management at SAP, “it can trigger logic back to say that I've got a problem. I can no longer allocate that inventory on that particular shipment as I thought I could.”
- One database, one system, one supply chain. In the last few years, software providers have been pulling all of their products onto a single supply chain process platform. “It's fairly new,” says Lamphier. “Various components have been integrated into that supply chain process platform longer than others, but actually moving our WMS onto it has been a more recent development—just within the last quarter or two.” SAP uses its enterprise resource planning (ERP) system as the central repository of information of supply and demand, as well as inventory, for the entire supply chain. And the modules all talk to each other. Transportation management systems (TMS) in conjunction with the event management modules help optimize freight, determine pick-up windows, determine carriers, keep track of in-transit times and create ASNs. That ASN not only gets sent back to the ERP for visibility, but it also gets sent to the WMS where the system uses the information to plan labor, equipment and resources at the receiving dock. When the physical product arrives, logic within the WMS, based on the receipt of goods, determines matches against actual demand.
