WORKING THE DOCKS

DEENA AMATO-McCOY

While few distributors practice "true" cross docking -- with pallets arriving on one truck and being shipped out on another almost immediately -- they are achieving significant savings in labor, handling and storage through cross-docking programs.

Those coming closest to the cross-docking ideal are using electronic data interchange and advance ship notices to keep better track of pallet movement throughout the supply chain.

"EDI and ASNs are mandatory in managing a large-scale cross-docking effort," said Jim Swoboda, director of logistics and distribution technology for Spartan Stores, Grand Rapids, Mich. "If there is not integrated data sharing, then the tracking, tracing and managing of pallet movement is extremely difficult," he added.

Even many retailers who still have not implemented fully automated systems are benefiting from cross-docking programs, which are reducing the handling of products and stored inventory in the warehouse, and the labor costs associated with it.

Minyard Food Stores, Coppell, Texas, a chain planning to leap into cross docking within a year, is exploring potential cost savings via less handling.

"By not having to handle product as much in and out of the warehouse, we hope to see at least a 10% reduction in labor right off the bat," especially in the areas of picking, put-away and replenishment in the depot, said Prudencio Pineda, senior vice president of warehousing and distribution for Minyard.

Most retailers who spoke with SN characterized their cross-docking programs as successful, even though outbound shipping schedules keep them from performing "true" cross docking. Instead, many retailers are allotting dock space in the front of their warehouses for temporary storage of inbound pallets.

"Eliminating the need for storage of pallets and no longer including them as part of the inventory is the concept of cross docking. However, that is not always the case," said Gary Capshaw, vice president of logistics for Fleming Cos., Oklahoma City.

Due to transportation scheduling, "product expected to be shipped to stores may not go out for 12 to 72 hours," when the first outbound truck is available, he said. "So for practical matters cross docking does have storage involved."

Transportation is only one issue skewing the cross-docking process. Retailers believe the key to gaining efficiency through a cross-docking program is by implementing information systems, primarily the exchange of electronic invoices through EDI.

"Adding automation to a commonly manual process improves the ability to replenish stores in a more efficient way," said Stephen Bogart, partner in consumer goods and retail national practices for CSC Consulting, Cleveland.

"The warehouse and retailers need those advance invoices to understand how product is moving through the supply chain and to match the goods being shipped to what is received," he added.

An executive of a large chain agreed that EDI and ASNs are essential for the success of any cross-docking program.

"ASNs are a critical part of the process," said the company source, who wished to remain anonymous. "They allow the warehouse to keep abreast of what was ordered, while tracking depot arrivals and timely shipments, instead of just guessing." Minyard plans to add both these elements shortly after implementing its cross-docking program.

"ASNs alert us to what product is arriving at our distribution center. We then can plan the time and labor needed to handle the shipment," said Pineda."It all comes down to communication."

"ASNs through EDI absolutely speed up the shipping process, and make cross-docking programs very successful," said Fleming's Capshaw. "However, retailers are still cross docking without these elements. Though it costs a lot of money to make a technical investment, this needs to become a priority."

Even without the technology, retailers are experiencing improvements through more manual cross-docking practices, such as handling reductions.

"The point of cross docking is to cut down on the handling of products into and out of the distribution center," said Joe Monaco, warehouse and distribution manager for Ukrop's Super Markets, Richmond, Va.

Fleming's Capshaw agrees. "Cross docking is an alternative to the typical way of receiving pallets at the depot -- receive product at the dock, transport it to racks where it is stored until ordered, and then select one case at a time to go out to the stores," he explained. "We have eliminated the need to handle the pallets, since we only store them for hours as opposed to days."

According to Spartan's Swoboda, cross docking eliminates steps in the handling process, which reduces costs and speeds up moving goods through the supply chain. Once handling is reduced, retailers have the ability to cut labor costs.

"If the warehouse is not stocking various pallets, we can save the chain costs usually associated with the labor of picking pallets from our slots," said the large chain's source. "We are also saving costs associated with storing those pallets, in turn reducing our inventory in the warehouse."

Cross-docking efforts are also helping distributors lower their inventory levels.

"Cross-docking programs are practical and more cost-effective for chains because they are taking the element of storage out of the warehouse," said Fleming's Capshaw. "We make sure that when items are only stored temporarily they are kept closest to the dock, so they are easily accessible upon shipping."

"By not having to carry as much inventory in our warehouse, we could see between a 10% and 15% reduction in inventory after our first year of implementing cross docking," said Minyard's Pineda.

Another benefit that retailers can experience through cross docking is less need to rely on direct-store-delivery.

"We have agreements with the manufacturers of products we cross dock that instead of conducting DSD, they come here," said Ukrop's Monaco. "We have room at our distribution center to off-load pallets into store sets and reload the product on our trucks."

According to Monaco, by using cross docking rather than DSD, Ukrop's is able to alleviate back-door traffic at stores by sending only one truck, as well as reducing the amount of labor needed to unload multiple deliveries at stores.

"Filling our outbound trucks allows us to maximize our cube space on outgoing product," he said.

Minyard believes that eliminating DSD will help cut the retailer's costs.

"We can get better prices with our manufacturers if we bring product in directly through the warehouse rather than have them make extra trips to our stores," said Pineda.

"In order to deliver goods to our 83 stores, manufacturers need to drive to all of those locations," he added. "It's easier to bring the product to one place and let us ship it out. And if it needs to wait for the next truck, at least we have the accommodations to store it."