Cross-docking is an order fulfillment procedure that cuts off the requirement of mid-stage storage of goods. If properly managed, it speeds up the picking process and dispatching of goods, thus reducing operating and storage costs. Learning the advantages and disadvantages of cross-docking and how they fit with your organization is an important factor for evaluating the supply chain process and deciding whether cross-docking is right for your business or not. Make sure you analyze each key factor before opting for cross-docking for your business. Here are some advantages and disadvantages of cross-docking.
Advantages of cross-docking
• Reduces goods handling.
• No need to store the goods in the warehouse.
• Save the warehouse storage area.
• No Packaging and picking required, thus reducing labor costs.
• Goods delivered to the customer more quickly through a cross-dock system.
• Transportation vehicle has fuller loads for each trip, therefore, a saving in transportation costs.
• Eliminate the need for order picking and packing process.
• Constructing cross-docking terminals is less expensive than constructing a warehouse.
• High revenue of products with everything moving quickly through the cross-docking terminal. Products usually spend less than 24 hours in cross-docking terminal.
• Products destined for a similar endpoint can be transported as a full load, reducing overall distribution cost.
Disadvantages of cross-docking
• Proper management time and planning are required for handling the cross-docking process.
• Capital investment is needed for implementing the cross-docking strategy.
• Cross-docking mainly depends on trucking for transporting the goods, therefore, a large number of transport carriers are required.
• A large volume of goods is necessary to be cost-effective.
• The organization has to have a reliance that their suppliers will deliver the right items in its right condition to the cross-docking terminal on time.
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