By Mike Eaton | Principal, Transportation Practice
The most efficient transportation situation for most businesses is to minimize distance and maximize weight, or to ship short and heavy. Distance can be difficult to influence, at least in the short-term, but shipment weight can almost always be optimized with a little foresight and planning. Cross-docking has advantages and is one strategy to consider. Regardless of whether you ship short or long, shipping heavy — taking advantage of as much capacity as possible — boosts efficiency.
There’s no real new news here, it’s a bit of Supply Chain 101. Almost every company that ships anything knows it, but I frequently talk to managers that feel like the problem is too daunting, involving complexity they aren’t ready for or equipped to tackle. While it’s true that optimizing movements across a vast network can get complicated and require detailed analysis, there are some simple things that can be done by almost any supply chain professional.
Here are some tips for evaluating a cross-docking system that can help you get started down the right path and boost efficiency without a ton of investment:
- Start with planning. Begin by running simple data aggregation analysis. Evaluate volumes in individual markets and identify where you can generate consistent truckload flows from origin to destination pairs at least weekly. Understand your minimum service requirements to help define the size of the geographies that generate shipment volume and frequencies needed to support your service levels. This may involve rethinking which markets are serviced by which cross docks and/or the number of cross docks required.
- Come up with some basic rules that make sense. You don’t have to spend weeks running data through advanced optimization engines to build a decision tree, just begin with some sensible rules to govern potential eligible shipments. For example, you may determine that all shipments under 5,000 pounds may run through consolidation points for redistribution instead of sending them on multi-stop truckloads. Dynamic optimization may help you get the most out of a cross dock network long term, but isn’t required to get started. Once you have a system in place, kinks can be ironed out to make it run more efficiently.
- Choose a 3PL wisely. If you decide to use a third party to help facilitate cross-docking or pooled services, be mindful in choosing one with industry specific expertise. For example, if you needed a heart transplant, you wouldn’t use just any surgeon you could find on google — you’re going to use a cardiothoracic surgeon who specializes in heart transplants, performs them often, and may come highly recommended. It’s the same concept here, if you ship food or consumer products align yourself with a 3PL that has experience working with your specific industry.
As you’re planning a simple or elaborate cross-docking strategy, it’s important to take the time to evaluate the resources in your network. Many companies don’t view cross-docking as a core competency and are hesitant to use their own warehouses or stocking points for consolidation. In reality, some incremental labor and IT support are all that may be needed to use these facilities to support a more efficient shipping operation; the nice part, overhead is already covered! The more you can rely on existing infrastructure, the less you have to invest in a third party.
Many shippers have realized significant savings and efficiencies by instituting a cross-docking system. When you’re ready to optimize or if you need help getting started, feel free to reach out to me via LinkedIn or continue the discussion on the Supply Chain Intelligence Network™.
Mike Eaton is a Principal, in the Transportation Practice, at Chainalytics where he focuses on transportation management improvement initiatives and the application of transportation technology. Based in Chicago and an avid cyclist, Mike often pedals over 100 miles in a single session… He does not recommend this mode of transportation for your supply chain shipments.