Crossdocking Comes of Age

Can any industry prosper with the idea of receiving product on Monday, putting away on Tuesday, with the system registering it (i.e., becoming ‘visible’) on Wednesday and shipping it on Thursday? Maybe, but such days are quickly disappearing. Now the idea is receive on Monday, and ship out on Monday; Tuesday at the latest.

For many companies, crossdocking operations have grown spontaneously. Factors such as material handling warehouse systems helped increase visibility, letting warehouse operators see more of what’s going on. A result is that companies sort of stumble into crossdocking.

Unplanned systems work, but there’s a better way. All you need to do is plan. And if you have product coming in and going out, you might want to start planning, because crossdocking is coming.

Lots of models to choose from

Crossdocking systems range from simple manual types to sophisticated highly automated models. Target, for example, uses an automated crossdocking model to handle well over 50 percent of its volume. “Target has pursued crossdocking as an essential business model to make its overall logistics system work,” says Arthur St. Onge, president of St. Onge Co. “It designates a door per store in a distribution center, bringing in product from suppliers that enters that particular dock at one end of the facility. Workers then unload the trucks and load the pallets and cases onto conveyors. From there, the product, which is labeled for the proper store, is sorted to assigned dock doors at the other end of facility. Target doesn’t maintain much inventory.”

Target has been able to create this business model with its large suppliers. “This model is not typical,” continues St. Onge. “It’s just one end of the scale. There’s a lot of mechanization in the model to make it work. This is true of stores like Lowe’s and Sears. They’ve determined that the supplier is not going to do much more that put the proper nomenclature on the case and the retailer will take care of the rest of the crossdocking functions. But there’s no reason why the retailer can’t shift that back onto the supplier and be less dependent on capital for material handling.”

At the other end of the spectrum are little or no automation crossdocking models, where product comes in and is moved to the outgoing door for shipment within the next few hours. Some staging may occur, but, in general, product comes in and goes out almost immediately.

“This is traditional crossdocking,” says Jeff Hughes, director of market development, HK Systems. “Except for one or two industries, I don’t see this successfully being done, primarily because of the volume of product coming in and the large number of stores companies need to supply. What we’re seeing is more companies in need of a way to buffer product for the crossdocking process. It’s handier to have inventory on hand. They may not hold it long, but they need to stage product in some kind of racking, or holding structure, then pick it by case and send to retail stores.”

Another version is often used by companies replenishing consumer product goods. The ideal way, according to St. Onge, is to bring in palletized product presorted by the consumer product goods company for a store. It then becomes a store replenishment pallet. One example is the end-of-aisle display pallets that are prebuilt and shipped to the retailer distribution center, which then merges those pallets with other products to form a cube load on a truck for a particular store.

“We’re close to achieving this for loads other than just end-of-aisle displays,” says St. Onge. “The advantages are huge. But there are some shortfalls. The quantity cube of what the stores require on a daily basis or every other day from a supplier has to be sufficient to create a reasonably effective mixed palletload that will allow full truck utilization. Transportation costs need to offset the cost of crossdocking. This can be done; it just takes a bit of work.”

Whether you invest in automation depends on several factors, including volume and throughput needs. “Crossdocking covers many different levels of automation,” says Hughes. “In its truest, purest form, you should have no automation at all, or very little. Ideally, you can receive a pallet, break it down, send cases to a repalletizer, build a new palletized group that can be sent out to sorter and ship it out on a truck. Crossdocking today, however, often requires a level of automation that we, as an industry, didn’t appreciate 10 years ago. Today’s throughput rates and handling requirements often demand some automation.”

Moving ahead

“If distribution centers could do store prep, and ship rapidly enough, it’s possible to crossdock loads to within three to 60 minutes of departure time,” says St. Onge. “Those loads would simply be transferred from the inbound trucks to the trucks going to the stores. I think this is where it’s going. But there are holdups. One is communication, which can be resolved. The other holdup is a bit more difficult because it involves sharing the benefits of crossdocking between retailers and DCs. Most of the benefit goes to the retailer.”

With crossdocking, retailers don’t need to maintain much inventory or do order selection. The labor for these processes, as well as putaway, has thus been eliminated. Handling has been handed back to the supplier. In many crossdocking models, the supplier handles these responsibilities and the cost goes back to his operation.

“Suppliers won’t take on this additional cost unless there’s recognition by the retailer that the savings the retailer will experience will be shared,” continues St. Onge. “It’s got to be done honestly. Some experiments are going on now. The potential is absolutely huge. The savings to suppliers and retailers, as well as to the overall supply chain, would be substantial. But it’s going to take people at high levels to buy into the idea.” MHM

Crossdocking 10 Million Pounds Manually

Ace Hardware has been crossdocking since the mid 1980s, and much of it is still handled manually.

“Dave Myer, senior vice president, Retail Support, recognized the benefits of crossdocking and began implementing it,” says Don Aleo, redistribution manager. Back then, most of Ace’s freight was prepaid. The real issue, though, was receiving as many as 100 shipments a day of one type of pallet from multiple trucks. The trucks would get backed up, resulting in delays and other inefficiencies. Crossdocking was viewed as a way to consolidate that freight, making life easier. “And that’s how it evolved,” continues Aleo.

“We do pure crossdocking. Trucks come into the dock, pallets are removed and staged to be reloaded, because we’re combining pallets from multiple companies and rebuilding the load, then they are sent out on trucks to the warehouse.” Turnaround time varies from a few hours to 24 hours, depending on freight combinations.

“We’ll have one of our drivers or a common carrier pick up freight and come to our crossdock,” continues Aleo. “We then process the bills from the vendors to see where everything is going, then mark the pallets to their destination, and stage them in an area in front of the outbound loading dock. Some pallets we break down, but only for the convenience of cubing the truck.” The goal is to keep the service level at or above 97 percent.

The Ace system is paper-based, which just goes to show that crossdocking can be a simple, yet powerful implementation. “Once we’ve loaded the truck we fill out what we’ve put on the truck and gather the paperwork to go to the retail support center. We handle up to 300 million pounds in six facilities, 10 million pounds per month alone at our Summit, Illinois, facility,” Aleo concludes.

Ace did not redesign its facilities to accommodate crossdocking. It uses lift trucks and pallet jacks, but does not use conveyors, sortation equipment or racking.

Automated Crossdocking Speeds Up Belk’s Distribution Center

Belk, a privately held department store chain in the United States, does about 85 percent of its volume in men’s, women’s and children’s soft goods, primarily apparel. It has 215 stores in 14 southeastern states and does $2.3 billion in sales. After some research, a team of executives concluded that one highly automated, crossdocked distribution center, located in an area central to all stores, would make the distribution process faster and more efficient, saving on freight costs and allowing minimal merchandise handling. The company chose Blythewood, South Carolina, as its distribution location.

“Crossdocking lowered Belk’s cost of inventory and speeded its supply chain,” says Steven Maisch, regional sales manager for FKI Logistex Buschman, who worked with the vendor team to outfit the new distribution center. Consultants DCB and Company and Carlstadt, New Jersey-based W&H Systems, an FKI Logistex Buschman systems integrator, began working with Belk in the fall of 1998.

Now, more than 90 percent of inbound goods are directly crossdocked. The installation features two FKI Logistex Buschman UniSort X sliding shoe sorters with 33 diverts, and almost 35,000 total feet of conveyor, including 26,000 feet of FKI Logistex Buschman gravity roller conveyor and 3,500 feet of FKI Logistex Buschman Accuglide zero-pressure accumulator conveyor.

W&H had to design a flexible receiving dock able to receive both conveyable and non-conveyable merchandise. For conveyable product, the goal was to design an automated inbound sortation that would allow cartons to flow directly from the trailer to either processing or crossdock to shipping. Non-conveyable merchandise is still manually handled.

In the new, highly automated environment, shipments are unloaded quickly; floor-ready vendor shipments flow through the facility in seven minutes and are staged for the next store delivery. “In the previous environment, the time from the vendor to the fixture was approximately 18 to 19 days,” says James Harvey, executive vice president of Belk. “In the new environment, it’s less than seven days.”

Sources

For more information, contact any of the following companies:

• Ace Hardware, www.acehardware.com

• FKI Logistex, www.fkilogistex.com

• HK Systems Inc., www.hksystems.com

• St. Onge Co.., www.stonge.com

• Tompkins Associates Inc., www.tompkinsinc.com

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