Although cross-docking is still in the planning stages for most retailers and wholesalers, those programs already in place have yielded substantial benefits.
"The big advantage is cost savings," said Joe Sealey, vice president of distribution center and warehousing at Minyard Food Stores, Coppell, Texas. Minyard, a self-distributing chain, is involved in three limited cross-docking programs with vendors.
"As soon as you eliminate on-hand stock in your warehouse, you open up cube space that would normally be taken up. There's also the cost factor from the manufacturer. [But] the most critical point would be the higher turnaround time, from when stores place the order to when they get it," Sealey said.
Another large retailer, who asked not to be named, is now moving much of its general merchandise and apparel items by cross-docking -- a practice that has resulted in higher turns and reduced inventory. "We're doing a lot in both apparel and [nonfood] lines," the source said.
More than 90% of the chain's apparel, for example, is now involved in cross-docking. Since the program began two years ago, warehouse storage has gone from 8,000 stockkeeping units to about 1,000 SKUs.
The key to the program's success has been vendor cooperation. "More and more, when vendors fill an order, they preassemble it by store. The cases coming into the distribution center are already marked for a particular store and we just pass them through the system," the retailer said.
"It all depends on how many manufacturers are aligned with the replenishment process. The traditional system meant sending a large order to a vendor, who would replenish to the retail distribution center, with individual stores being supplied from warehouse stock," the retailer continued.
"But with retailers capturing point-of-sale data, vendors can now cut specific orders for specific stores, which, when they arrive at the distribution center, are processed right through onto the shipping dock."