Tip: A few key advantages of cross-docking

by The Tip Doctor

April 27, 2010

The Tip Doctor, Insider Learning Network 

Cross-docking is a goods flow-through process in which inbound goods are directly used for shipping outbound orders, eliminating the need to store them in the warehouse. Warehouse planners or supervisors can make cross-docking decisions either in real-time during the receiving process to meet an existing shipping demand or they can predetermine cross-docking decisions based on planning for select outbound orders.

With the increasing demand for shorter delivery times and reduced inventory costs, perhaps you are considering cross-docking as a viable option to improve your supply chain and warehouse operations. SAP Extended Warehouse Management (EWM) in SAP ERP Central Component (ECC) 6.0 offers a comprehensive cross-docking functionality that is integrated with your warehouse module. Cross-docking is a process in which goods are shipped to the customer or destination directly at the time of receipt based on appropriate linkages such as inbound receipts that can fulfill outbound order requirements. Without cross-docking, goods are stored in the warehouse instead of being shipped immediately upon arrival.

Cross-docking could benefit your supply chain in several ways. Here are a few key advantages of cross-docking, courtesy of Ashish Saxena, Managing Consultant, IBM Global Business Services:

Inventory cost reduction: Cross-docking offers the perfect opportunity to ship goods without storing them in a warehouse, consequently lowering the inventory carrying cost and allowing you to buy only what is needed. However, a great partnership with suppliers is essential to meet delivery windows with frequent shipments.

Material handling cost reduc tion: Cross-docking helps reduce material handling and movement costs within a warehouse. While a normal warehouse process takes receiving, putaway, picking, and shipping to deliver to customers, cross-docking reduces the process steps to receiving and shipping.

Warehouse storage space: With cross-docking, goods are moving directly from the receiving area to the shipping area, bypassing the warehouse storage and hence reducing the storage space requirement.

Cross-docking supports JIT (Just-in-time) operations in a distribution environment: While JIT aims to have the correct inventory at the right time, cross-docking enables a shorter cycle time to ship goods upon arrival in the warehouse.

SAP EWM and Cross-Docking

If your warehouse is operating on an SAP EWM system or your organization is evaluating a new warehouse system, consider the advantages SAP EWM provides for cross-docking. Two main types of cross-docking functionality are available:

Planned cross-docking: This option represents decision-based cross-docking. You make cross-docking decisions prior to the arrival of goods in the warehouse. Expected incoming goods are matched to outbound deliveries so that upon arrival, inbound receipts are reverted to a shipping area directly.

Opportunistic cross-docking: This type of cross-docking occurs when the goods arrive in the warehouse. When SAP EWM receives the goods, it automatically searches for cross-docking opportunities for existing outbound deliveries that are being picked or shipped.

(Read more about cross-docking with your subscription to SCM Expert.)


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