The long-range vision is clear enough: Somewhere down the road, in the not too distant future, retailers and suppliers will use cross-docking techniques for distributing a wide range of products throughout the supermarket industry.
But the reality today is somewhat less picturesque as many distributors continue to
find that tapping into the benefits of cross-docking on a widescale basis remains an elusive goal.
Nevertheless, retailers and wholesalers are discovering and making use of a variety of innovative methods to leverage the power of cross-docking on a more limited basis.
For instance, some distributors are using third-party cross-docking services for acquiring specific product categories or are involved in test programs with key trading partners. Others are evaluating the results of test programs and deciding how to proceed forward.
Three such industry players are Hannaford Bros., Jewel-Osco New Mexico and Spartan Stores. All three distributors have embarked on cross-docking programs with the goal of enhancing logistics efficiency and cutting costs. Although the programs have met with varying degrees of success, they all helped chart a path for future progress in the broad area of cross-docking.
Here is an account of the cross-docking experiences of three companies:
Hannaford Bros.' Hybrid Approach
SCARBOROUGH, Maine -- Hannaford Bros. here is involved in a cross-docking test with Procter & Gamble, Cincinnati, that is saving the chain up to 23 cents a case in logistics costs, according to Andy Westlund, vice president of distribution.
Under the program, which Hannaford calls a hybrid approach because goods typically still remain at the warehouse for one or more days, the chain is cross-docking about 253 pallets a day, he said.
"About 50% of what comes in goes out the same day, and the rest requires a reduced amount of handling. So it's not traditional shipping and it's not [true] cross-docking. We have a hybrid," Westlund said.
Westlund outlined the company's cross-docking program at a recent conference in Birmingham, England, titled "Optimizing Total Supply Chain Performance," and sponsored by CIES: The Food Business Forum, Paris.
Although the program clearly is resulting in some significant cost savings, it's also prompting the chain to re-evaluate many areas of its own distribution process.
One major consideration involves the possible redesign of the physical layout of the distribution center to help enhance the receiving process, Westlund said.
To cross-dock, warehouses can be outfitted in several ways: with movable racks in front of the outbound door; with dedicated racks near the outbound door; with prepositioned trailers for outbound storage; with pallet racks above the door docks, and with block-stack pallet locations.
As cross-docking volume increases and becomes more predictable, the layout can be changed to incorporate permanent drive-through and drive-in rack locations near outbound doors. Another issue the chain is grappling with as part of its cross-docking test is whether stock primarily should be "pushed" through the warehouse by retailer and wholesaler programs or "pulled" by consumer demand.
"We have found it's most important that the retailer be an important driver in the process, but we don't believe it should be all one or the other. We use push when the product and demand require it," he said.
According to Westlund, Hannaford's next steps will be to identify the retail costs of cross-docking; work with more suppliers; evaluate and improve order processing; improve warehouse handling and buying systems, and make greater use of electronic data interchange.
Supplying Answers At Jewel-Osco
ALBUQUERQUE, N.M. -- Jewel-Osco New Mexico here is saving money, freeing up warehouse space and cutting product order lead times dramatically as part of a cross-docking program involving store supplies, said Ron Henry, food merchandising manager.
The 11-store chain, a division of American Stores, Salt Lake City, has partnered with Bunzl Distribution USA, St. Louis, to satisfy nearly all its store supply needs via cross-docking.
"I use cross-docking for all of my packaging supplies, including bakery, deli, produce and meat, which is where we use most of our packaging. There is some miscellaneous product involved, but the bulk of it is packaging supplies," Henry said.
Under the program, Bunzl coordinates shipments of customized store-specific pallets of supplies from the manufacturer through to the chain's distribution point.
Probably the biggest benefit from the program is lower acquisition fees, Henry said.
"One of the best advantages to it, no question, is acquisition fees by cutting down on costs. I can't give you numbers, but I think it would be safe to say reasonably that this program has cut down our shipping fees on supplies by 3%.
"The savings comes primarily from more efficient packing of trucks and less transportation, labor and handling costs. Every time you have to handle something, costs go up," he said.
The chain has also been able to dramatically cut down on order lead time and reduce warehouse slotting requirements.
"We presently receive two deliveries a week. We have a 48-hour window that we order for. When you can turn something around, especially a packaging item, in 48 hours, that's excellent.
"In addition, packaging is very hard to slot in some of the distribution centers because of the movement, so not having to do that is important," Henry said.
Jewel-Osco sees the possibility of launching expanded cross-docking programs in the future, but probably for high-volume items or categories only.
"I see the use of cross-docking increasing, because it's cost-effective. But you have to be selective. You don't want to tie up inventory at the store level. Get it in and get it out. That's the key to our business, keeping the flow," Henry said.
A Challenge For Spartan Stores
GRAND RAPIDS, Mich. -- For Spartan Stores here, cashing in on the premise of cross-docking, thus far, has proved more frustrating than rewarding.
The wholesaler, which services about 500 stores, is now re-evaluating its participation in one cross-docking program while formulating plans for how to proceed in the future.
"At this time the only thing we're doing with cross-docking is working with one supplier of deli and bakery products. The test has involved small case quantities on the perishables side of the business," said William May, senior vice president of procurement, distribution and management information systems.
The two main factors preventing wider success with cross-docking are incompatible warehouse dock configurations and lack of software to track product demand and movement. Of the two, though, finding or developing the right software is the bigger obstacle, he said.
"We have not yet identified what I would consider to be state-of-the-art cross-docking tools that allow us to track the product. Systems-wise, it's OK until the product hits our back door and we receive it. Then it gets interesting," May said.
A large part of the problem comes when "we have to marry the product across our warehouse floor, especially when we're dealing with small case quantities and putting slow movers in with full pallet loads.
"That product has to be staged somewhere on the warehouse floor until it is ready to be married in with the load going out to our retail customers. We've been having difficulty doing that successfully.
"Until we get a better grip on that kind of software, it just doesn't seem like it's going to work well for us," he said.
The other challenge in rolling out a successful cross-docking program at Spartan involves warehouse configuration. "What complicates it for us is that we're loading store-bound trailers in a very compressed time frame, which is very difficult because we're moving a monumental amount of product across a very small dock area.
"Then the added confusion of trying to marry one, two or five cases in with full-pallet loads makes it hard for management and our labor force to keep track of everything," he said.