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Benchmarking for cross-docking success

AMG Logistics

Manufacturers are reviving their interest in cross-docking as a “new and improved” technique to get cost-effective results. Companies looking to reduce their inventory levels might benefit from cross-docking activities.

Cross-docking is the process of dividing a big cargo into smaller ones and/or merging shipments for delivery, ideally in less than 36 hours. In the “store and rack” supply chain model, merchandise is first held in the warehouse, then it is transported, and finally it is placed on the store shelf. Count on this cycle to last 90 days. Think about how much money and time you could save if you could shorten this cycle to 60, 30, or 22 days. The bottom line might significantly increase.

However, when they restructure their supply chain strategy, operations teams need to be informed of what to expect. To manage inventory at lower costs over the long run, it is essential to pay close attention to lean methods and analytics.

Determine and compare your measurements in order to obtain dependable and consistent performance. To avoid unforeseen performance consequences from an enhancement in another area, benchmarking might compare performance to other internal measures. External comparisons to peer groups, rivals, and industry standards are also included.

Directors of supply chains may define performance and assess it against some of the best operations in the nation by following the next five stages.

  • What really is efficiency? Pick the most critical elements that characterize operational efficiency, such as cases or pallets per hour. Avoid settling for less important criteria, such as cost per pallet. Although it is a common piece of data among certain managers, cost-per-pallet statistics are not the best measure of operational excellence since several variables might skew them.

  • Long-term measurement and observation are necessary to determine greatness: Good weeks or months do not guarantee it. The only method to gauge sustained performance is to compare quarterly and, ultimately, yearly statistics.

  • Choose the appropriate drivers: Put your attention on the two main factors that affect excellence: efficiency and quality.

  • What is quality? The definition of quality is simpler than the definition of efficiency. Most shippers and 3PL managers concur that accuracy and damages are the two quality drivers. The idea of zero is the main focus, including lost shipments, damage, and labelling errors. Stock shortages and inventory variances are blatant signs of effective inventory management.

  • Sort efficiency factors into groups: Product shipping within 48 hours of receipt; live unloads handled in less than two hours; percentage of loads processed by must-arrive-by date are all efficiency drivers. Building capabilities that are properly matched to throughput demands and the capacity to unload beyond commitments are additional elements in the efficiency quotient. A word of caution: drivers will receive less attention the larger the list of metrics. Consider drivers.

Gainsharing with suppliers, legal incentive pay programs, controlled transportation costs, and a smaller footprint for unused warehousing are other benefits of running a well-documented cross-docking business.

Since shippers, distribution centres, and 3PLs adopt a variety of strategies, it can be difficult to find the proper logistics executives who can manage at this level of sophistication. However, there are capable partners out there, and they strengthen the supply chain infrastructure.

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AMG Logistics is a Lagos-based TRACE certified logistics company. Our services include Freight Forwarding, Customs Clearance, Trucking, Distribution, and Warehousing within Nigeria.

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