OBSTACLES TO CROSS

PATRICK SCIACCA

Wholesalers and retailers agree that cross docking can yield significant efficiencies, including increased order accuracy, faster product movement to stores, better cube use on trucks, reduced waste of distribution center space and labor savings.

Several distributors told SN they are looking to increase the percentage of products they move via cross docking and expand into new product categories.

Some companies are finding, however, that they need to invest in distribution centers with larger dock space, as well as systems capable of tracking rapid product movement, in order to truly cross dock efficiently. These can represent a significant investment for distributors.

Cross docking received a significant boost with the onset of the Efficient Consumer Response initiative in 1993, which identified the practice as one of the most effective ways to cut supply-chain costs. If used industrywide, the practice could save as much as "23 cents to 25 cents per case," said Ken Walker, a consultant at Kurt Salmon Associates, Princeton, N.J., and co-author of the original ECR report.

Some distributors told SN they have been cross docking for as long as 15 years.

Ingles Markets, Black Mountain, N.C., which services a total of 191 facilities including 123 supermarkets, 65 superstores and three warehouses, is "exploring" new product categories to cross dock. Ingles has been cross docking "in one form or another for about 15 years," said Randy Jameson, vice president of distribution for Ingles.

"We cross dock all fluid milk and all our supplies," he added. "I think we could cross dock anything."

Ingles' use of cross docking has helped the company increase its use of warehouse space and provide more accurate orders to stores, he added.

Giant Food Stores, Carlisle, Pa., has seen marked improvements in transportation time and labor savings through the use of cross docking at its perishables distribution center there. These positive results have spurred the retailer to increase the number of products it cross docks.

"We cross dock produce, floral, seafood [live lobster], dairy, deli and meat," said Denny Hopkins, vice president of marketing, public relations and consumer affairs for Giant. About 30% of all products at the distribution center are cross docked, he added.

According to Hopkins, cross docking "cubes out loads" and makes it easier to identify overflow, aids in route planning of trucks, helps ensure freshness and inventory control and results in labor savings.

Associated Food Stores, Salt Lake City, is a relatively new player in the cross-docking game and is looking to expand its use.

"We've been cross docking about three to five years," said Richard Parkinson, president and chief executive officer of Associated. The wholesaler cross docks about 10% of its products, he added, noting that, due to a lack of space, only dry grocery is currently cross docked.

Parkinson said that to cross dock effectively "you need 60 to 80 feet of staging area," which at present Associated doesn't possess in its distribution center. "We're door poor," he added. Parkinson said he would eventually like to cross dock as much as 25% to 30% of products.

The wholesaler is "in the process of building a new warehouse," said Parkinson, that he hopes will allow it to increase the percentage of products that are cross docked.

In addition to improving the efficiency of cross docking, Ingles, Giant Food and Associated said that their companies are looking to implement warehouse management systems in the near future, in the hopes of improving the tracking of products as well as expediting their distribution to stores.

Hopkins said that Giant's system would work with radio frequency technology that would read stockkeeping unit numbers on product pallets, and coordinate the movement of warehouse stock via an onboard computer that high-lift operators could access on their vehicles.

Parkinson said that frozen and deli product categories are currently under a warehouse management system and Associated is looking to add others, such as nonfood. High-volume items such as canned goods are popular cross dock categories, according to Kurt Salmon's Walker. Paper products and cereals also top the list. Walker added that "pre-arranged ad displays" easily fit into a cross-docking initiative.

According to a survey conducted by Kurt Salmon Associates in 1997, 25% of retailer respondents' soft goods shipments used direct-store delivery, 15% used cross docking and the rest involved receiving and redistributing goods through retailers' distribution centers. Cross docking was used even less with hard goods, accounting for only 12% of products, compared with 40% delivered via DSD and 50% going through a distribution center.

Although cross docking can save money for wholesalers and retailers in the long run, the popular practice does require an investment in distribution center space and technology.

Cross docking "requires a large staging area, and there must be on-time delivery," said Giant Food Stores' Hopkins.

"The only drawback is the space required," noted Associated's Parkinson.

Walker added that cross docking is easy "to visualize and conceptualize" but "mechanically" can be difficult to implement. Besides some distributors' lack of sufficient space, he believes new technologies are needed to expand cross docking significantly.

"On the level it's being done, it can be done manually," Walker said. He added that software is being developed to aid larger-scale cross docking.

"It [cross docking] has to grow and mature a little bit," Walker added.