How Does Cross-Docking Reduce Storage and Handling Costs?

Warehousing is an essential process in your supply chain operations, but it may be costing you more than it should. If you move a high volume of goods, especially perishable items, and can benefit from minimal warehousing, then you might want to consider cross-docking.

What Is Cross-Docking?

Cross-docking is a logistics process that involves unloading cargo from an incoming container and loading it directly into an outbound transportation vehicle. It doesn’t require any storage, as the unloading and loading take place at a cross-dock terminal.

This process can be particularly beneficial when shipping perishable goods with a short shelf life. It can also benefit you when shipping promotional (time-sensitive) items or chemicals that require expensive storage and careful handling.

If you ship pre-packaged orders from a manufacturing facility or another warehouse, cross-docking can also help you knock down your overall costs.

Moving an order through several warehousing locations before reaching the final delivery destination often ends up costing more than the order. Combining all orders into a single shipment saves time and cuts storage and handling costs drastically. Here’s how.

Cross-Docking Requires No Storage Space

With cross-docking, you don’t need to unload shipments into a warehouse; go through processing, sorting, and storing all the goods. Then, repeat the process in reverse when loading the goods into another transportation truck.

You still need to process the orders and handle inventory cataloguing, but you’re likely doing that with warehouse management software that streamlines the process.

What you don’t need is storage space for all those orders that arrive at your receiving dock and go straight to consumers. That means you can cut your storage costs significantly.

With less storage space, you can save money on rent and reduce inventory costs, including insurance and taxes.

You can also minimize your fixed costs. You can enjoy lower equipment costs and slash your energy bills, as reduced storage space means less lighting, heating, and cooling.

You Need Less Manpower to Manage Inventory

Labor costs are probably some of your highest costs, especially if you have a large warehouse or more of them in different locations. But those costs are also some of the most necessary for running an efficient business, and you may not be able to afford to reduce your staff.

But with cross-docking, you would need fewer warehouse workers since the process doesn’t require picking and storing items in your warehouse.

That means you can trim labor costs significantly. You can also ensure more efficient and accurate inventory cataloging, which typically requires a large staff. With fewer items passing through your warehouse, cataloging your inventory becomes a piece of cake.

No Inventory Handling Means Less Material Damage

Warehouse inventory management consists of many different operations, including receiving, sorting, storing, picking, packing, dispatching, and handling returns.

During any of those processes, there’s a chance of material damage. Sometimes, goods get damaged during transport, but damages happen more often due to improper material handling.

Since cross-docking doesn’t require moving various products from incoming containers to storage and then to outbound trucks, it reduces the risk of damage.

It also allows your staff to inspect all the received goods right there on the dock to ensure that nothing has been lost or damaged in transit.

Needless to say, less product damage translates to higher customer satisfaction and fewer returns, which means lower costs, more sales, and higher revenue and profit.

Cross-Docking Knocks Down Shipping Costs

Warehouses are often located far from customers’ final delivery destinations, so transportation vehicles need to travel more miles, leading to high shipping costs.

Cross-docking typically takes place closer to those delivery destinations, so the overall transportation costs are lower.

Transportation vehicles take the shortest routes to delivery addresses, reducing delivery times and contributing to better fuel economy.

So, apart from enjoying lower shipping costs, expediting shipments, and increasing customer satisfaction, you can also reduce your carbon footprint. If you care about eco-friendliness and protecting the planet, make cross-docking a part of your supply chain.

Dedicated Cross-Docking in Chicago

When operating a warehouse, one of your top priorities is certainly minimizing your storage and inventory handling costs. Cross-docking can help you achieve that and optimize your entire supply chain.

If you need a third-party logistics (3PL) company to handle all your warehousing, trucking, and logistics needs, JRC Dedicated Services can help.

We offer short-term and dedicated warehousing, short-haul and dedicated trucking, and reliable cross-docking services, including standard, live, and intermodal cross-docking.

Contact us today for a free consultation to determine how we can help and get a free quote.

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