While traditional warehousing and cross-docking are interrelated, they are ultimately two different processes. While often juxtaposed against one another for varying reasons, the truth is that each practice is used to facilitate different styles of inventory management. This article will explore the concept of cross-docking and how it differs from traditional warehousing practices.

What is Warehousing?

In its simplest form, a warehouse is a large structure used for storage. The traditional warehousing model is relatively easy to grasp. Physical goods get delivered via truck or rail to a warehouse, where they are stored on pallets or racks. Once these goods are needed or resold by the owner, they will be loaded back onto trucks and shipped off to their next destination.

Warehouse storage allows businesses to purchase materials, components, or finished goods in bulk from their suppliers and keep them conveniently on hand. By stocking large volumes of inventory within the warehouse, the business owner may more easily manage the ebb and flow of demand. Some of the benefits offered by operating a warehouse include:

  • Reliable inventory access
  • Freeing up space at core business location
  • Easier to carry safety stock
  • Facilitates bulk purchases when prices are low
  • Greater control over shipping/handling processes

What is Cross-Docking?

Cross-docking is a function commonly performed in more complex warehousing operations, such as distribution centers or import-export waystations. The practice itself is described fairly well by the name. At its most basic, cross-docking involves the delivery of goods via an inbound truck, from which they are moved “across the dock” and loaded onto an outbound truck without entering into the warehouse’s permanent inventory.

The cross-docking process has been popular among importers and exporters for many years. In cross-border ground shipments, a domestic carrier will often deliver goods to a waystation near the border. Using a cross-docking process, these goods are then offloaded from the domestic carrier and loaded onto a truck from the receiving country for delivery to their final destination.

Cross-docking is also sometimes preferred for specific product types. For example, temperature-controlled goods and perishables are often well-suited for cross-docking, as they can reach their end destination faster without the need for specialized storage capabilities at the midpoint.

Beyond these more traditional uses, Just-in-Time (JIT) inventory management practices have perhaps been the largest driver of cross-docking growth in the United States in recent years. JIT seeks to reduce overall storage costs through an optimized flow of goods, parts, or raw production materials. In this model, it has become common to order goods from the supplier, cross-dock them through the fulfillment center or warehouse, and then send them on immediately to the final destination where they arrive “just in time” to fill their role in the production operation or to avoid stockouts.

The cross-docking process offers many benefits, such as:

  • Lower overall storage/labor costs
  • Expedited shipping times
  • Minimal risk of unwanted inventory surplus
  • Mitigated risk of product damage caused by storing/picking
  • Supports sales/production growth without the need for additional storage space

Should I Use Warehousing or Cross-docking?

If you’re trying to determine whether cross-docking or warehousing is better for your business, the reality for most shippers is that there is rarely a cross-docking vs. warehousing argument that needs to be settled. For most businesses, cross-docking is merely a means to control held inventory on specific high-volume products. The majority of shippers will benefit most from a comprehensive warehousing and distribution solution that incorporates cross-docking capabilities as part of the package.

At Phoenix Logistics, we have a comprehensive portfolio of real estate, warehousing, and transportation management services. We’re well-prepared to help you meet your increased demand with a new warehouse or distribution center staffed by our knowledgeable employees and optimized using our advanced warehouse management system.

Our logistics experts can help you determine if cross-docking is right for you. To see how we can help you streamline your warehousing operations, please contact us.

Frank P. Crivello is a Milwaukee-based developer and Chairman & Founder of Phoenix Investors.