SUPPLY CHAIN

Prepared by Presented to
Sebastian Supply Chain
Thomas Conference

Date 09th Nov 09

 CROSS DOCKING
OPERATION

¾Cross docking operation were first pioneered in the US trucking

industry in the 1930s

¾US Military began utilizing Cross Docking in 1950s

¾Wal Mart discovered the benefit of Cross Docking in retail sector in

the late 1980s

¾More and more companies are exploring Cross Docking opportunities

during Economic Down Turn

¾Cross Docking directly supports bottom line

 What does Cross Docking
mean?

Cross docking
C d ki i an increasingly
is i i l common L Logistics
i ti t h i
technique th t
that
rapidly consolidates shipments from multiple sources in order to gain
economies of scale in out bound delivery.

It essentially eliminates or minimises inventory holding function of a

warehouse while still allowing it to serve its consolidation and shipping
function.

This effectively turns the warehouse into a giant conveyor that is

constantly receiving orders and replenishment, minimizing a company’s
capital outlay on static stock.
 Lean Approach through
Cross Docking
g

How can you reduce waste and increase speed in

Supply Chain?

¾Reduction in inventory investment

¾Reduction in storage space requirement
¾Reduction in warehouse handlingg cost
¾Reduction in order cycle time
¾Faster inventory turn over
¾Accelerated cash flow

“Health of the inventoryypplays

y a vital role in
determining the health of the organization and its
profitability”
 Definition of Cross Docking

“To rapidly consolidate shipment from multiple sources

and realise economies of scale in outbound
transportation .
transportation”

In practice ‘Cross Docking’

g operations require large
g
staging areas where inbound materials are sorted,
consolidated and stored until the outbound is
completed and ready to ship
ship.

If the staging
g g takes maximum up p to 24hrs,, the
operation is usually referred as a “cross-dock” DC.
This was first pioneered by Wal Mart.
 Advantages of Cross Docking

¾Streamlines the Supply Chain from point of origin to

point of sale

¾Reduce handling cost, operation cost and storage of

inventory
y

¾Fast delivery and good service level

¾Eliminate or minimise warehousing cost

¾Increase retail space

 Typical application of
Cross Docking

¾“Hub & Spoke” arrangements, where materials are

brought into one central location and then sorted for
delivery to multiple destinations

¾Consolidation arrangements, where a variety of smaller

shipments are combined into one larger shipment for
economy of transport

¾Deconsolidation arrangements, where a single shipments

is divided into varied smaller shipments for wider
distribution
 Factors Influencing
Cross Docking

¾Cross docking is dependant on continuous communication

between suppliers, DCs, and all points of sale

g Cost
¾Freight

¾Cost of inventory in transit

¾Complexity of Loads

¾Handling methods

y
¾System integration
g between the stake holders

¾Tracking of inventory in transit

 High inventory turnover

¾ High inventory throughput

¾ Optimize storage volume

¾ Demand planning & Sales forecasting

¾ Phasing of imports shipments

¾ Cost efficiency in DC operation

¾ Is DC for long term storage?

 Ageing inventory & Stock
days

¾ What is ageing inventory

¾ Cost of ageing inventory

¾ How to address ageing problem

¾ Reasons for inventory ageing

¾ Stock days or Week’s cover

¾ Set target for stock days & ageing

¾ Measure & monitor the performance

 Impact of delivery return to DC
efficiency

¾ Shows wrong sales

¾ Double handling and wasting of resources

¾ Product damage

¾ Losing of sales opportunity

¾ Lead to wrong practice at sales side

¾ Tight control is required

 Importance of KPIs in
achieving DC efficiency

¾ Benchmarking

¾ Identify the deviation from target

¾ Identify how far we are from industry standard

¾ To achieve continuous improvement

¾ Identify areas of improvement & resource requirement

 Role of human resources in
DC efficiency

¾ Most vital aspect in any department

¾ People with right skill at right role

¾ Working time and condition

¾ Realistic target and fair wages

¾ Over time pay for over time job, but one day off and
maximum 10 hrs per day

g and motivation
¾ Training
 Questions?

THANK YOU……
YOU