April 2010 | Commentary | IT Matters

Crossdocking: A New Vision for an Old Idea

Tags: Logistics I.T., Cross-Docking

Jason Howton is director of product management at TAKE Supply Chain, 512-735-4122

Manufacturers and distributors know crossdocking—the practice of immediately converting inbound deliveries to outbound shipments—can help create more efficient supply chains. But there's an obstacle to crossdocking that can undermine those efforts: the need for continuous, real-time shipment visibility.

Without the shipper's ability to track and trace individual parcels, shipments may be delayed, misplaced, or duplicated. As a result, subsequent shipment setbacks and excess inventory build-up can diminish the benefits crossdocking is intended to deliver.

Lack of visibility often results from relying on enterprise resource planning (ERP) applications to support crossdocking activity. ERP solutions typically don't have the real-time tracking capabilities to provide the visibility required for crossdocking.

Because of their focus on the financial impact of business activity, ERP applications essentially overlook crossdocked shipments. Parcels slated for crossdocking exist in a financial limbo outside the ERP domain.

This functional gap poses a significant challenge. Without tracking and tracing capabilities designed specifically for crossdocking, companies risk building excess inventory and incurring the administrative overhead required to receive and process rogue shipments. They also lose shipping control and find it impossible to troubleshoot missing, duplicate, or misdirected shipments.

FINDING THE SOLUTION

This is where an old idea meets a new vision. Regardless of their ERP solution, companies can achieve best-in-class crossdocking performance by adopting the following operational priorities:

  • Visibility. Real-time shipment status, location, and delivery time information available to customers, suppliers, and third-party logistics providers.
  • Auditability. Up-to-the-minute historical records of shipping activity, down to the individual parcel level, to isolate errors and bottlenecks, and simplify troubleshooting.
  • Compliance. The capability to enforce rules and standards that ensure shipment accuracy, timeliness, and approvals.

The following technologies help maintain real-time visibility, auditability, and compliance:

  • Advanced labeling solutions assign shipments unique parcel tracking numbers that provide continuous shipment status and history.
  • Distinct tracking databases provide an audit trail of individual crossdocked shipments, as well as a view of shipping activity for all suppliers.
  • Mobile data collection devices, such as handheld scanners, with pre-defined crossdocking parameters allow shipping and receiving personnel to scan and coordinate inbound and outbound shipments, sending information directly to the tracking database for mass uploads.
  • Just-in-time delivery support that extends the receiving process to suppliers, synchronizing data to control delivery to correct locations.

While crossdocking is an appealing practice for companies looking to maximize supply chain efficiencies, it follows the same basic rule as other data-driven supply chain practices: you can't improve what you can't control. To achieve best-in-class crossdocking performance, companies must ensure visibility, auditability, and compliance. Adopting this strategy delivers significant financial and operational advantages.