Essay About Cross-Docking And Little Handling

Journal of Commerce
Essay title: Journal of Commerce
Keep it moving
BY DAVID BIEDERMAN
6 February 2006
Journal of Commerce
Cross-docks. Mixing centers. Flow-through centers. These small, speed-based distribution
facilities are springing up nationwide. But while the concept is taking off, its nothing new.
Cross-docking is the process of moving a finished product from the manufacturer to a retailers
shelf with as little handling in between as possible. Its been around for as long as there have
been trucks, according to George Powers, president of logistics provider American Port Services
in Savannah, Ga.
The difference is that instead of merely a way to speed domestic goods to market, cross-docking
has become a cornerstone of global logistics strategies for some of the biggest retailers.
Driven by a flood of Asian imports, current cross-dock usage far exceeds what Powers saw when
he founded APS 20 years ago. “Imports are flooding in but not necessarily in the quantities and
configurations that people need to ship them to stores” and distribution centers, he said.
According to a Lehman Brothers global equity research report, 50 percent of Sams Club network
volume flows through 19 company cross-dock centers that collectively handle some 19 million
pallets annually. The centers are part of parent company Wal-Marts global strategy to increase
facility throughput as it moves from category-based to velocity-based networks.
A 2004 report by the Boeing Center for Technology, Information and Manufacturing comparing
the supply-chain practices of leading mass merchandisers said 75 percent of Costco Corp.s
goods are cross-docked, spending on average only nine hours in a distribution center.
Scale is what enables mass retailers such as Wal-Mart and Target to employ cross-docking for
competitive advantage, said Satish Jindel, president of SJ Consulting Group Inc. in Sewickley,
Pa. Consolidation and distribution based on individual stores needs contribute to reduced
handling and warehousing costs, and given the volume moving through mass retailer supply
channels, that adds up to big savings. “It fits into the overall picture of having a lean supply
chain,” he said.
As retailers fine-tuned their supply chains over the years, it became clear that reducing less-thantruckload
shipments into distribution centers was a priority, said Steve Lanter, executive vice
president of transportation operations for Ozburn-Hessey Logistics. Beholden to retail giants,
manufacturers got stuck with inventory and implemented strategies such as pool distribution and
cross-docking to move product more efficiently.
Goods from as many as 30 suppliers are consolidated into truckload shipments at Ozburn-
Hessey cross-docking facilities for distribution to mass-retail facilities or stores. The retailers
enjoy fewer deliveries, while suppliers get the benefits of outbound truckload rates. “Its a much
more efficient process that saves money all around,” Lanter said.
Offshore sourcing has driven the need for cross-docking and portside deconsolidation,
said Dawn Salvucci-Favier, director of solutions management at Rockville, Md.-based
supply-chain software provider Manugistics. Concerns over carrier capacity also drive the
trend, as importers feel pressure to hold more stock and reduce lead times.
The retail, grocery and pharmaceutical industries are primary users of cross-docking. In
many