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Cross Docking

By applying cross docking the traditional warehouse is replaced with a cross dock that involves processes of unloading, sorting (which involves receiving and dispatch of orders) and loading which can be clearly seen from the figure below:.
             .
             Figure 11: This figure shows a two-stage cross dock. Workers put pallets in lanes corresponding to the receiving doors; a second team of workers sort pallets into shipping lanes, from which a final team loads them onto outbound trailers. This illustrates a retail cross dock in a post-distribution operation. This two-stage system has the advantage of allowing workers in shipping to pick from among several pallets in a shipping queue (which results in more tightly packed loads), while still allowing value-added processing by workers in receiving. The disadvantage that pallets are handled an additional time, and the cross dock must be wide enough to accommodate two queues, resulting in additional labor cost due to travel. Were the distributor able to arrange pre-distribution with its vendors, they could eliminate one of the queues and handling costs would go down significantly.
             In this just-in-time system there would be no worry about storage, since any shipments received are specifically for orders that have already been placed by customers. With coordinated delivery schedules between a chain of suppliers and customers, this system can work without any delays and when performed efficiently can reduce transportation costs in addition to eliminating the inventory costs. The elimination of inventory costs can be shown with the simple mathematical formula that is used to calculate total relevant costs for purchasing a product in a traditional system.
             TRC = AD / Q + Ivr + Dv.
             Where:.
             TRC = Total Relevant Cost.
             A = Fixed Cost per Order.
             D = Annual Demand.
             I = Average Annual Inventory.
             Q = Quantity Ordered per Order.
             v = Cost of Each Unit.
             r = Holding Cost per Dollar per Year.


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