Paul Cella has an idea. Under the umbrella of Network Services Company (Mount Prospect, Ill.), a collaborative enterprise that coordinates national account sales for 72 regional distributors of janitorial and disposable foodservice products—the group has combined revenues of $4.3 billion and almost 400 locations—he wants to pool orders and shipments through eight cross docks located around the country.
He's done the analysis and has models that show how it will work. The benefits will accrue from freight cost savings from shipping by full truckloads, as well as better pricing from placing full truckload orders with suppliers.
"It's an interesting project for us, and it will save us literally millions of dollars, but we haven't got anything in place at this point," says Cella, a general manager for Network Services Company.
Although he expects it to take one-and-a-half to two years to set up, the fact that Cella thinks the technical aspects of the project will be the easy part, and that he's even attempting to coordinate the transactions and material flow among so many independent business owners, shows just how far the concept of cross docking has come. There are plenty of examples for him to follow.
A cross dock by any name
At its most pure cross docking describes a facility where goods flow directly from receiving to the shipping docks without stopping or being put away into storage. Hence the alternative term "flow through." That's how packages move every evening through postal facilities and the parcel courier hubs of UPS, FedEx and DHL. It's also how goods flow through the million-sq.-ft.-plus facilities of some of the mass retailers, which receive goods pre-labeled by store that move by conveyor to trailers at dedicated shipping doors for every store that they service.
Most companies don't have the volume to make the investment in such buildings and equipment practical. But cross docking doesn't have to be complicated, or require a lot of capital.
"People who never thought they could cross dock are now looking at cross docking as a way of speeding things through the system," says Geoffrey Sisko, a senior vice president for Gross & Associates (Woodbridge, N.J.)., whose material handling consulting firm worked with the Warehousing Education and Research Council (WERC, Oak Brook, Ill.) to develop a guide for implementing a cross-dock operation (Making the Move to Cross Docking, WERC, 2000). Most products that are not FIFO or date-sensitive, such as pharmaceuticals or food items, can be cross docked, he says.
One thing cross-dockable items have in common is that the shipping destination and quantities are known when products are received. It's still considered cross docking by most if product has to go into some kind of buffer storage, or receive some kind of value-added work, before going out the door. This buffer storage can take the form of "dynamic" holding locations on the floor, or in trailers— which can be a cheaper way of holding product than using actual floor-space—or even an automated storage and retrieval system that temporarily stores and sorts product.
Before people could use computer systems to match up advanced shipment notices with orders, Sisko explains, cross docking could be done manually by stapling notes with details on current backorders to receiving documents. Hot incoming products could then be diverted before being put away. Software can now match up such information closer to real time, allocating product against the latest customer demand data while it is still in transit.
Unless a company can afford miles of conveyor, just because a building has receiving docks on one wall, and shipping docks on the opposite, does not make it an ideal cross dock facility, says Sisko. "The reason [such a setup] is dumb is that everything that comes in receiving has to travel the whole length of the building to get reshipped."
A better setup has all dock doors on one wall, or at 90 degrees to one another, he says. Fast movers would then arrive at the doors that have the shortest travel distance between incoming and outgoing trailers. Rick Crawford, director of operations for NYK Logistics, agrees. He says the big square or rectangular box design of most warehouses is not ideal for cross docking, which NYK describes as "transloading." Traditional warehouses don't generally have enough doors either, or trailer parking spaces.
"The other thing that's crucial to transloading is proximity to the port," says Crawford. "The further away you put it, the less viable it becomes."
NYK transfers product from in-bound ocean containers to outbound trailers. It handles imported goods for retailers such as CVS, Kohl's and Target. At its facility near Long Beach, Calif., during the peak period in October, it will handle 300 to 320 ocean containers, resulting in 200 to 225 outbound trailers per day. To keep track of containers and trailers the company uses internally developed transload software integrated with yard management software and an RFID-based, real-time locating system from WhereNet Corp. (Santa Clara, Calif.).
"The big advantage of cross docking is it allows you to wait until the container reaches the U.S. before you have to decide what the distribution of goods inside the container is going to be," says Crawford. "Prior to transloading, or cross docking, you had to predetermine where that container was going in its entirety before it left the Orient. Now we get anywhere from seven to 21 days more time in the supply chain to make a decision, because we wait until it gets to the U.S. then we can decide how to distribute the goods. As we get the goods we can move them from one ocean container to any number of outbound trailers. For someone like Target, we'll take the contents of a container and scatter it across 26 out-bound destinations."
Crawford says better forecasts from manufacturing companies and ocean freight consolidators are making cross docking more viable than it has been in the recent past. Software systems make it easier for them to move cartons more quickly from door-to-door in a paperless environment, which has helped them to increase output by an estimated 25% in terms of cubic centimeters per labor hour. Better quality point-of-sale data has also improved NYK's customers' ability to effectively distribute their products, he adds.
Vascor, Ltd. (Georgetown, Ky.) runs a different kind of cross dock operation in California. The company is a joint venture of APL Logistics (Oak-land, Calif.) and Fujitrans Corp. (Nagoya, Japan). It supports the manufacturing operations of several North American Toyota and Daimler-Chrysler plants.
The company's cross dock facility in Carson, Calif., supplies two North American factories and one export facility in Japan. Every day a dedicated contract carrier travels a regular route between various suppliers of parts and subassemblies, what's known as a "milk run." It follows strict arrival and departure times. Once freight is unloaded at the cross dock facility, it's moved to temporary storage locations. It will stay in the facility for a maximum of six hours before its loaded onto a truck in the proper sequence for the assembly line. Unload and reload times have to be as close to perfect as possible. Daily volume has grown from 600 cubic meters per day handled over one shift, to over 1,800 cubic meters over two shifts.
One of the keys to keeping everything in sync, says David Goyman, manager of logistics projects and cross dock operations for Vascor, is to design a system and schedule that are obtainable. They work with their partners to adjust travel times and expectations for how much freight will actually fit on a truck, which may be different from what the analysis says because of traffic patterns, oversize pallets, or non-standard packaging, for example.
Although more sophisticated, real-time information systems are in the works, today the operation uses a simple ticket system to track and sequence goods. Goods arrive along with a ticket box. The appropriate tickets are removed from the box and attached to the freight as it's unloaded. The tickets tell the unloaders where to put the freight. When the box is empty, everything has been received. On the outbound side, the tickets flow in reverse, filling up a box. When the slots are full, people know that they have all of the freight that needs to go on that particular truck.
"The ticket system is a double check system to make sure: 1) that we're getting the freight we're supposed to be getting on a daily basis, and 2) that we place it in the right location so that it can flow through the process smoothly without any interruption," says Goyman. Orders and advance shipping notices flow between the factory, suppliers and the cross dock facility by EDI.
Because they have a dedicated carrier for both the milk runs and the direct routes to their customers' factories, Goyman says they haven't seen any impact on transportation from volatile fuel prices or driver shortages. "I'm pretty amazed at how we can maintain the same standard day after day after day," he says.
From low tech to high tech
There's always more room for improvement, even in high-volume, high-tech cross docking operations. That's what Kohl's, the department store chain headquartered in Menomonee Falls, Wis., discovered at its cross dock facility in Macon, Ga.
With about one million sq. ft. of floorspace and 27,000 ft. of powered conveyor, the Macon facility can process 300 cases per minute, moving incoming products from receiving to a shipping dock dedicated to each of the stores that the facility serves in the southeast United States. Rather than use accumulation conveyors in Macon, systems integrator Dematic Corp. (Grand Rapids, Mich., formerly Siemens Logistics and Assembly Systems) simplified material flow by deploying "singulator" sorting devices manufactured by Sandvik Sorting Systems (Louisville, Ky.).
The relatively simple mechanical devices are widely used in parcel carrier facilities to transform a bulk flow of packages into a single, sortable stream. At the Macon facility, the devices reduced the need for almost 5,000 ft. of conveyor, saving an estimated $277,000 in annual operating costs. Duplicating the system at a new, identical Kohl's facility in Patterson, Calif., which is undergoing acceptance testing this month, engineers were able to reduce the building size by 80,000 sq. ft.
"It was still kind of Greek to them [when they designed Macon] because they didn't realize that the system design would utilize so little space. They were used to the accumulation conveyor and the saw-tooth merges and the room that type of system takes up," says Terry Cambron, the Sandvik account manager for Kohl's.
The non-stop material flow at Kohl's may be the ultimate form of cross docking, the absolute leanest way of distributing product, but it's the exception rather than the rule. Today only 30% of distribution operations cross dock 10% or more of their shipment volume, according to the MHM Census of Distribution research study. Most dedicated cross dock operations have to stage materials and release it in waves depending upon the shipping schedule and when docks and trailers become available. The day-to-day challenge is to maintain the balance between available labor and receiving and shipping, says John Naylor, manager of major systems sales for FKI Logistex (St. Louis).
"Everyone these days is looking at what they can do to lower cost per piece. That's the major driving factor," says Naylor. "A lot of people are looking at how to get beyond 10 to 15% cross docking capability. The problem you get is the sheer amount of doors you have to have to cross dock all of your product. Where does it truly make sense in the ROI?"
When it comes to making a cross dock operation work effectively, Naylor says software systems are helping to balance out material flow, slowing down lines that are backed up, and directing product to where there's idle capacity. Advancements in sorting technology are also making it easier to cross dock more product. When it comes to non-conveyable goods, he's seen voice technology used effectively to direct lift truck operators as they're distributing bulk items, allowing them to keep their hands free while they drop off carpets in staging areas for retail stores.
Corporate management, says Naylor, has gotten on the cross docking bandwagon. They understand cost per piece, and that cross docking can help lower that cost. To take maximum advantage of cross docking, management teams need to focus better on how they receive and process orders, and how they allocate, purchase and handle products. It can seem complex, and be difficult to implement, but the objectives of cross docking are simple.
"The less you have to handle stuff, the less you have to store, the more fluid your operation is, the more successful you are going to be and the more economical the operation is going to be," says Naylor.