The Benefits of Cross-Docking For Your Business

The Benefits of Cross-Docking For Your Business

Posted by OCT Freight Shipping | August 31, 2020 | Blog

There are several benefits of cross-docking for your business. Cross-docking is a useful method to reduce warehousing costs. With this, you can free up your capital that is tied in the inventory management. 

But how does it work? Generally, cross-docking allows you to keep less inventory in your warehouse. You can also experience faster inventory turnover with this method. 

You can quickly sort out your upcoming orders, process it at a receiving dock before sending on an outgoing transport vehicle. Essentially, cross-docking services in Canada drastically reduce or eliminate the need for warehousing.

Since most companies and consumers span borders, streamlining the global supply chain plays a vital role in your business strategy. With the benefits of cross-docking, you can improve your business progress in a supply chain and warehouse utilization.

What is Cross-docking?

Generally, the idea behind cross-docking services is to minimize the need for warehousing. This service lessens the number of handling requirements from suppliers to manufacturers. 

Typically, most companies use this method to avoid storage and excessive material handling. For example, mass merchants in the retail industry utilize cross-docking, which receives store-specific assortments. Apart from that, they can maintain continuous inventory replenishment as well without holding large stocks of inventory.

Moreover, it drastically reduces inventory carrying labour costs and other expenses incurred by warehousing goods. Most cross docks are set up in a building with inbound docks on one side and outbound docks.

How does it work? Technically, your inbound products are unloaded and then consolidated or sorted in the middle before being loaded onto an outbound transaction truck. Mostly, items in the cross-dock do not have to stay for more than a few hours. Cross-docking is one of the good business strategies that can boost your company’s fulfilment cost efficiency. 

What are the Benefits of Cross-docking?

Wondering whether or not to use cross-docking services in Canada? We will discuss the benefits you stand to enjoy from this service. 

Maximizes Storage Space

Generally, companies spend $6.53 per square foot of warehouse space. But with the use of cross-docking, you can reduce storage space. With this, you can save more money and reduce your company’s carbon footprint at the same time.

Minimizes Inventory Costs

Inventory management requires much-needed capital. Your inventory costs money to manage, store, count, insure and secure. Besides, money is lost when excess inventory gets damaged. With cross-docking services in Toronto, you can reduce the number of goods held over the long term.

Lessens Material Handling 

Cross-docking automatically minimizes the handling of goods around your warehouse. Most traditional warehouse operations consist of significant inventory and material handling, such as storing, sorting, picking, and packing.

These handling processes can lead to the damage of goods and important cargo. With cross-docking, the possibility of this level of damage reduces drastically. 

Improves Product Quality

One of the benefits of cross-docking is it can reduce the number of damaged products shipped to customers. With this, you can save money on returns while maintaining your customer satisfaction.

Minimizes Labour Costs

Cross-docking helps reduce the amount of labour needed to manage inventory. Since less manual handling is necessary, it automatically means you can cut labour costs.

Offers Better Service Levels

By lowering the cost of items, minimizing product damage, and lessening delivery times, you can improve your service levels. This is particularly crucial in a B2B environment with a specific service level of agreements.

Cross-docking Procedure and Basic Processes

In cross-docking, you only need the exact amount of cargo for the moment. This can minimize the transportation costs for all parties. Furthermore, it allows the suppliers to ship in commercial quantities. 

Then, the load will be sent to the cross-dock. The cross-dock then reconsolidates the load/item into individual shipments for each destination. Each shipment will be moved directly from the inbound dock to the outbound dock. With this, you can bypass the need to store and reorganize them in a warehouse and avoid the putaway and picking processes. 

Whereas, the cross-dock will consolidate the smaller shipments from multiple suppliers into full loads. After that, it will be moved on pre-appointed schedules and in truckload directly to the destination.

Bottomline

With all the advantages of cross-docking, it’s crucial to note that it’s not for every business. To determine whether it’s the right fit for your business needs, you must consider the benefits and procedures involved.

Here at OCTi, we can help you figure out if cross-docking services are the best fit for your Toronto business. Contact us via 905-695-1501 today!

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