Introduction

In broad context, cross-docking is not magi-cal. However, the technique is a very powerfulbusiness tool for supply chain management. Ithelps to achieve the key business objectives ofstock reduction, fixed resource reduction andmore responsive operating systems. As aresult, the practice is finding greater applica-tion across many business sectors.

This article considers the following areas:• What is cross-docking: who practises the

art?• What are the basic cross-docking opera-

tional models?• Why do businesses choose cross-docking as

a logistical alternative?• What are some of the issues and opportuni-

ties for cross-docking, now and in thefuture?

What is cross-docking?

A simple definition of cross-docking is asfollows: receiving product from a supplier ormanufacturer for several end destinations andconsolidating this product with other suppli-ers’ product for common final delivery desti-nations.

The key to the process is transshipping, notholding stock. Equally important is theprocess of turning expensive delivery consign-ments into economic loads through consoli-dation and resource sharing. For many busi-nesses it is essential to keep track of productconsignments as they progress along thesupply chain. An increasingly topical themefor many businesses is manipulating productinto a user-friendly form for the end user.

The term cross-docking has a maritimeand railway background. From the maritimeperspective, ships would discharge cargo“over the dock” on to smaller ships, bargesand wagons for consolidated economic deliv-ery. The practice became popular and preva-lent with the development of the railwaysystem, and especially when railways began tocarry product for industrial and private use.

Simple features included manual labelling,vehicle manifest, integrated delivery/collec-tion/trunking, trolleys, destination boards andtimetables. However, key cross-dockingelements were apparent: integrated resources,no stockholding, sequenced operationalprocess.

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Supply Chain ManagementVolume 2 · Number 2 · 1997 · pp. 49–52© MCB University Press · ISSN 1359-8546

Ewen Kinnear

The authorEwen Kinnear is the former Director, Operations Support,Exel Logistics, Milton Keynes, UK. He is now LogisticsDirector of Clarks International.

AbstractExel Logistics’ experience in a number of industry sectors,product profiles, operational techniques and technologysuggests that the outputs of cross-docking can appearmagical, even though they result from fairly standardoperational inputs. Explains the origins of cross-dockingand explores the operational aspects of switching from atraditional stockholding supply chain system to a cross-docking system, using a case study from the motorindustry. States that key benefits resulting from theadoption of cross-docking techniques relate to improve-ments in service levels, inventory levels, stock returns andunit costs.

Insights from industryIs there any magic incross-docking?

Basic cross-docking operational models

From a technical point of view, it is worthlooking at the evolution of an “intermodaltransshipment centre” which has operated inthe rail system. In its original stage, productwould move through the rail network to atransshipment shed, trains would pull up at aloading dock, porters would read each con-signment label and consolidate consignmentsin delivery run order. Ultimately, driverswould convey consignments to final deliverylocation and obtain a written proof of delivery.The delivery driver would also make consign-ment collections so that product could flowback through the network (Figure 1).

Key cross-dock features are evident in thisset-up:• shared physical resources;• timetables;• no stockholding;• consignment tracking.

The forerunner to Exel Logistics operatedseveral of these transshipment centres at siteswhich included Stoke-on-Trent, Birminghamand London Kings Cross. The companycontinues to operate out of these sites,although their procedures have, of course,become far more sophisticated.

Most businesses share common financialobjectives. In short, a business usually strivesto increase profit and reduce working capital(see Figure 2).

The cross-docking operational model,allied to a capital reduction programme,electronic stock transaction control and someform of process re-engineering, will assist anybusiness in achieving its objectives. A cross-docking strategy will help move most of thekey business ratios in the right direction;however, it is important to note it is not the

only logistical tool to achieve key businessobjectives.

Over the years many terms, techniques andsupporting technologies have grown uparound cross-docking. For example: consoli-dation, processing centres, just-in-time,product customization, satellite tracking, barcode tracking, etc.

Driven down to lowest common denomi-nator the possible operational alternatives arevery simple. In the cross-dock arena there aretwo classic consignment processes:(1) product sort; and(2) final destination sort.

Product can flow in and out of both processes.Sometimes operations use both simultaneous-ly. However, for definition and clarity thefollowing description is fairly common.

In the product sort model the original send-ing location will despatch a complete consign-ment of one product code covering all finaldestinations. The transshipment centre willreceive a series of these product consignmentsand break them down into common finaldelivery order (Figure 3).

Frequently in the product sort model thesending location lacks the time and/or spaceto sort by final destination.

In the final destination sort model the originalsending location will pick and label eachconsignment for the final destination atsource (Figure 4).

Clearly, if we know the final destination ofeach consignment at the original point ofdespatch, this can speed up the cross-dockprocess. Usually a label or, at best, a bar code,is attached to each consignment at despatchand this label or bar code is read each time theconsignment is handled subsequently.

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Is there any magic in cross-docking?

Ewen Kinnear

Supply Chain Management

Volume 2 · Number 2 · 1997 · 49–52

Figure 1 Cross-docking: historic origins

Figure 2 Why is cross-docking important?

In their simplest sense these two cross-dockmodels are applicable across almost allbusiness applications.

Why do businesses choose cross-dockingas a logistical alternative?

Cross-dock techniques are applied universallyacross a wide range of businesses working inmany market sectors. Within the UK, specificexamples are found in the automotive, foodand retail sectors, covering products in adiverse range, from fruit to headlamps, andacross all temperature ranges.

In each case similar basic issues recur, suchas:• product labelling;• containerization;• product handling;• information transfers;• process timetables;• product consolidation;• resource utilization.

The basic business motivations for utilizingcross-dock techniques include increased stockflow, reduced stockholding, improvedresource utilization and reduced delivery leadtimes. Increasingly, cross-docking is used tomanipulate product into user-friendly finaldelivery point order.

Case study: Goodyear GB Ltd

Goodyear Great Britain Limited is a goodexample of a business which chose to movefrom a traditional stockholding supply chainoperation to a stock-flow/cross-docking sys-tem. It was combined with a version ofshared-user distribution unique in the tyreindustry.

Until 1994 Goodyear GB operated a fairlytraditional supply chain strategy. Productentered the supply chain from the manufac-turing location at Wolverhampton, andthrough import into one of two central ware-house facilities. Product then moved toreplenish stock held at one of four regionaldistribution centres (RDCs) at Barnsley,Bristol, Warrington and Borehamwood.

From the RDC, product was moved direct-ly, or through one of seven outbases, to one ofthe many hundred end-user delivery points,including leading distribution networks likeKwikfit, ATS, NTS and Charlie Browns.

The shortcoming of this operating systemwas that it required a large commitment to:• dispersed stockholding;• capital assets – poor utilization;• high levels of manning;• low stock turn – high inventories;• high administration and logistics costs;• poor vehicle utilization.

Consequently, the supply chain was sub-optimized in terms of cost and servicepotential.

Goodyear GB, in conjunction with ExelLogistics and others, developed some clearbusiness objectives which would derive from anew stock-flow/cross-docking system:• allow rationalized central warehousing;• consolidate overall stock levels;• maximize stock visibility;• 100 per cent next day delivery;• improve operating system flexibility –

especially high/low flows;• develop core sales/manufacturing focus;• deliver acceptable cost reduction –

warehousing and transportation.

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Is there any magic in cross-docking?

Ewen Kinnear

Supply Chain Management

Volume 2 · Number 2 · 1997 · 49–52

Figure 3 Operating methodology: product sort

Figure 4 Operating methodology: destination sort

In short, the business decided that it wouldwork to improve the lead time from manufac-ture to point of sale, at significantly reducedunit cost and reduced pipeline inventorycosts, while improving future operationalflexibility.

Because of time and space restraints at theWolverhampton Central Distribution Centre,Goodyear GB decided to choose the productsort dock model at Break Bulk Centre level.Each day the central warehouse would consol-idate that day’s orders in product categoriescovering all outlets within a distributionregion, and despatch bulk product loads toother regions. The receiving cross-dock centrewould then break down and sort each bulkconsignment across all relevant final deliverylocations within that distribution region fornext day delivery.

Goodyear operates a central sales orderprocessing facility called Tyreline. Orders arecaptured between 7.00 a.m. and 5.00 p.m.each day. The traffic and warehousing func-tions produce a provisional operational planbetween 2.00 p.m. and 4.30 p.m., consideringpicking requirement, trunk requirement anddelivery resource requirement. This plan isconfirmed at 5.15 p.m.

After the operational plan is confirmed, thecentral warehouse picks in product code orderbetween 6.00 p.m. and 10.00 p.m.. Tyres arethen moved in a series of scheduled night

trunk vehicles to the relevant cross-dockcentre – Kings Cross, Bristol or Warrington.

The cross-dock centre will then systemati-cally break down each product consignmentreceipt across final delivery points between1.00 a.m. and 5.00 a.m. for next day delivery.The trunk vehicles collect return pallets andproduct from each cross-dock centre, includ-ing a high volume of work trunk casings forreprocessing. At the cross-dock centreGoodyear GB utilizes supplier property,vehicles and human resources.

Against its initial objectives, Goodyear GBhas achieved the following outputs:• Service level. Next day UK, from 87 per

cent to a mean average of 96 per cent.• Stock hold. An overall inventory reduction

of 16 per cent on value.• Stock return. An improvement of 14 per

cent.• Property. The release of more than 12,500

square metres (135,000 square feet) ofwarehousing.

• Vehicles. The release of all contract hirecommitments.

• Headcount. A useful reduction contribu-tion.

• Unit cost. Reduced operating costs in realterms by over 12 per cent.

Goodyear GB’s physical operations can nowhandle volume fluctuations with less fixedcost penalty and with improved service levelsand accuracy rates.

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Is there any magic in cross-docking?

Ewen Kinnear

Supply Chain Management

Volume 2 · Number 2 · 1997 · 49–52