Addressing the Technology Gap to Improve Visibility in Cross-Docking
Young Chul Kim, Director of U.S. Product Management, TAKE Solutions | January 17, 2011
Cross-docking has emerged as a popular strategy for third-party logistics providers and organizations with extensive distribution networks. The practice of immediately converting inbound deliveries to outbound shipments offers significant financial and operational advantages. Specifically, it reduces inventory costs by eliminating intermediate warehousing activity. It also improves delivery times by making shipments instantly available for delivery — without the delays incurred by transferring shipments to and from a warehouse.
Effective cross-docking requires continuous real-time visibility of shipments as they move from the supplier to the end customer. Unfortunately, even with warehouse management modules supporting cross-docking installed, traditional enterprise resource planning technology doesn’t offer the real-time visibility and accountability to optimize cross-docking efficiency. Because of their focus on the financial impact of business activity — including shipping, receiving and warehouse operations — ERP applications essentially overlook the importance of real-time visibility for efficient cross-docking of shipments. Furthermore, typical ERP systems string traditional transactions to be executed automatically to emulate cross-docking, without providing granular details specific to the cross-docking transactions.
Without the ability to track shipments on a real-time basis down to the level of individual parcels companies can lose control over inbound materials, increasing the potential for duplicate shipments, delayed shipments and other errors that can offset any gains in efficiency. This functional technology gap poses a significant challenge for 3PLs and distributors. Without tracking and tracing capabilities designed specifically for cross-docking, companies risk building up excess inventory and incurring the administrative overhead required to receive and process “rogue” shipments. Companies simply don’t know the status of cross-docked items, which in turn means they can’t fully control the flow of shipments from suppliers to customers or troubleshoot missing, duplicate or misdirected shipments.
Even with an existing ERP investment, organizations that want to achieve best-in-class performance in cross-docking will need to fill the gap with an additional supplier technology that addresses three key operational priorities for cross-docking activity:
• Visibility. Real-time shipment status, location and delivery time information available to customers, suppliers and third-party logistics providers.
• Traceability. Up-to-the-minute historical records of shipping activity, down to the individual parcel level, to isolate errors and bottlenecks, and simplify troubleshooting as it pertains to cross-docking.
• Compliance. The capability to enforce rules and standards that ensure shipment accuracy, timeliness and approvals.
Ideally, the solution should include an integrated combination of cross-docking components with real-time tracking and tracing capabilities to improve visibility, centralize receiving and distribution activities, and capitalize on the efficiency gained by consolidating shipments and optimizing delivery schedules. Consider the following “must-have” cross-docking solution checklist to help continuously improve key performance indicators and the customer experience:
Advanced Labeling. Suppliers must have the capability to generate labels meeting the requirements of the customer and the 3PL. The label should include a unique identifier — or parcel tracking number — that provides ongoing visibility of shipment status and history.
Distinct Tracking Database. Information on cross-docked shipments should reside in a distinct database that provides the audit trail on individual shipment status and a view of shipping activity spanning all suppliers.
Mobile Data Collection Devices. Because effective cross-docking requires the coordinated actions of a widely distributed team, mobile data collection technology is essential. Handheld devices should allow drivers and shipping and receiving personnel to scan inbound and outbound shipments slated for cross-docking. The handheld devices can communicate directly with the tracking database via a wireless connection or store-scanned information for batch uploads to the database at a later time. The devices should also feature the applications that enforce predefined receiving, delivery and cross-docking parameters designed to minimize shipping errors and subsequent returns.
Supplier Sweep Support. Cross-docking is focused on the receiving, staging and shipping of data in an optimal way from multiple suppliers. Often, 3PLs and organizations with extensive distribution networks want to extend the receiving process to their supplier to manage pickup to ensure just-in-time receipt to the cross-dock. Ideal cross-docking solutions support supplier sweep pickup of inbound materials to the cross-dock. While cross-docking 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 cross-docking performance, companies must ensure visibility, traceability and compliance. Adopting this strategy delivers significant financial and operational advantages.
Milk Run Delivery Support. Many complex companies want to manage the delivery of cross-docked goods in the same system to synchronize the data and ensure traceability of each part. Cross-docking systems should support the ability to control part delivery and ensure delivery to the correct location and even, if applicable, the correct person.
Validation and Reporting. The cross-docking system must feature the search and reporting capabilities that allow a central administrator to perform end-of-day validation on materials on hand and delivered to help minimize any misdirected or duplicate shipments. The capabilities must support consolidation of information across suppliers and customers and allow the administrator to drill down to information on individual shipments.
Returns. The ideal cross-docking solution will also create a unique identifier that provides similar visibility and traceability for the returns process. Handheld data collection devices must also enforce compliance with agreed-upon returns policies.
While cross-docking is an appealing practice for companies who want to wring every drop of inefficiency out from their supply chains, it follows the same basic rule as other data-driven supply chain practices: You can’t improve what you can’t control. In order to achieve the utmost performance in cross-docking activity, organizations should complement existing ERP applications with integrated capabilities in the areas of visibility, traceability and compliance. Otherwise, expect to run the risk of multiplying the same inefficiencies that cross-docking is intended to address.
Source: TAKE Solutions