The Strategy for Optimization of Handling, Transportation and Warehousing

In today’s competitive environment, every organization is striving to achieve an edge over its competitors. Competition is on the cost of product, quality of product, delivery of products and after sales service. Everyone is therefore trying to optimize the cost of product by various means without sacrificing the quality. At the same time organizations are keen to reduce any wastage through loss of materials in handling or through damages in handling. The basic principle behind this is minimum handling, minimizing the process time, minimum storing and minimum movement. Cross-docking is the strategy to meet these objectives in industrial operations both within the manufacturing plants as well as in the supply chain ‘suppliers-manufacturer-customers’.  Supply chain network of one industry will differ from the supply chain network of another industry.

Traditional practices in handling, transportation and warehousing

Traditionally materials are received from the suppliers at the receiving section of the warehouse, unloaded from the trucks or trailers, inspected, taken on books, stored in the respective locations, issued from the location when required by the customers and transported to the destination in the plant or to the customers in the supply chain. These operations involve lots of storing space for receiving section, inspection bay and storing space in the warehouse. Maintaining the inventory in the warehouse for long incurs lots of costs, known as ‘Inventory Carrying Cost’ (ICC). Inventory carrying cost includes the costs of manpower employed, warehouse building, tools and tackles, electricity charges, water bills, telephone calls, safety and security cost, depreciation cost, obsolescence cost and handling losses. There are some sensitive materials in the warehouse, which require special environmental conditions for storage, for example, bearings, belts, rubber items, chemicals and electronic items. Cost of providing these conditions is also part of ICC.  Inventory Carrying Cost is usually a percentage of the cost of inventory maintained and varies between 10-15%. Management always look for reducing the cost of inventory as well as the ICC.

Cross-docking: The Strategy of today

Cross-docking is a process in which a cross-docking terminal is built in the plant or at the distribution center. Basically the area is divided in three parts: the receiving dock, the area for unloading the materials from the incoming trucks, sorting of receiving materials, packaging (if required) and the area for loading the out bound trucks (Fig. 1). The materials coming from the suppliers or from the manufacturing units are unloaded in the receiving area, segregated and immediately loaded on a different sets of out bound trucks waiting for taking the materials to the concerned department in the manufacturing plant or to the customers in the supply chain with the help of forklifts, conveyor belts, pallet trucks or any other mode. This involves minimum handling and storage of the materials thus reducing the chances of loss of materials in multiple handling, loading and unloading and transportation. The materials are in the cross-docking terminal only for a small period of few hours required for sorting, loading and unloading of the materials.cross-docking

Benefits of cross-docking

The cross-docking operations avoid storing space, paper work, racks and material handling equipment usually required in the warehouse. It is very cost effective way of managing the inventory thus reducing the production cost and improving the profitability of the company. Almost all the modern plants and distribution centers have adopted this strategy for remaining competitive in the industry.

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