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Technology Update: Move It

March 22, 2003
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With retailers and manufacturers under pressure to implement fast flow-through, cross-docking seems like a natural. So why aren't more food industry members practicing it?



Filmmaker Woody Allen once observed that the problem with instant gratification is that it takes too long.

Too long, indeed, for the generations of consumers who cut their teeth on McDonald's, and whose idea of home cooking is listening to the drone of a microwave. Cash on demand, news on demand, entertainment on demand - the way to keep consumers happy these days is to give them what they want, when they want it. Empty shelves won't do. Retailers know it, as do their suppliers.

This is putting increasing pressure on both parties to implement fast flow-through at every juncture of product distribution. Cost savings is another huge incentive. Why let inventory pass from hand to hand, only to have it gather dust in a warehouse, when the same product could be on a truck headed for Sam's Club? In fact, why warehouse at all?

Sound familiar? Then at one time or another you've probably considered using cross-docking to reduce inventory and streamline your product flow. In its purest form, cross-docking is exactly as it sounds: the movement of product across a dock from one vehicle to another, with no intermediate storage or warehousing. Depending on customer requirements, some methods focus on pallet quantities, others on consolidation and case/partial pallet level movement, and still others on case-level distribution. And since speed and accuracy is the name of the game, bar code scanners, radio frequency data communications terminals and electronic data interchanges replace pad and pencil. According to Ken Battista, senior vice president of business development for the Power Group, large stand-alone flow-through facilities hum to the receive-ship, receive-ship tempo of cross-docking 'round the clock. "They're essentially large truck docks rather than your more conventional warehouse/distribution center," he noted.

But, he adds, you don't ordinarily find them handling food. "In fact, I can't think of one true cross-docking facility that is food-oriented by design," he noted. Instead, he said, the food industry is more likely to cross-dock on a selective basis, and usually from a company warehouse or distribution center. "If hot dogs are in season, demand may be such that the product comes in one door and goes out the other," he explained. "But the reality is that inventory turns in the food industry aren't nearly as great as in other industries."

If nothing else, the buying practices of large grocery chains virtually guarantee that warehousing will figure into the distribution equation. "Grocers don't buy by the pallet or or case. They buy by the truck load."

Too many SKUs?

There is also the question of whether cross-docking is well suited to the myriad product variables encountered in food distribution. As a result, the concept has met with enduring skepticism from industry members, who have no trouble enumerating the obstacles -- the vast number of SKUs, the continual price changes, the variable rates of sale -- that a food-oriented cross-docking solution would be required to negotiate. "It's true. There really has been a huge proliferation of SKUs in recent years," said Burt Schaffer, managing principal of Tompkins Associates, a Raleigh, N.C.-based operations consultant. "Thirty years ago, you had maybe a dozen SKUs for a given product line. Today, you can have hundreds of them due to the proliferaton of flavors, pack sizes, special customer requirements and so on. And the truth is, some of those product lines and operations will never be suitable for cross-docking."

The chicken-egg syndrome has also been a persistent source of inertia. Just as retailers require a critical mass of cross-dock suppliers to justify the cost of reconfiguring their distribution centers (and integrating conveyors, bar codes and buying systems into their operations) so do suppliers require a critical mass of customers to justify their investment in bar codes, cross-dockable unit loads, deployable cases and so on. As matters stand, few manufacturers are equipped to efficiently create store order quantities.

"I don't know of any food company providing mixed pallets that are shipped directly to stores, at least not in a systematic manner." Schaffer said. "And most companies wouldn't have the manpower or equipment."

Irrelevant or not?

So is the issue of cross-docking irrelevant to food industry members? Not at all, Schaffer said. "It makes sense if you're dealing in pallet quantities of a single product," Schaffer continued. "Of course, in the food industry it's unlikely that you're going to have customers requesting store delivery of a full pallet of anything. But if you're shipping multiple pallets to multiple distribution centers, either yours or the customer's -- then it makes sense. You can set up a cross-docking operation on your own plant property, bypass your warehouse and reduce handling, labor and storage costs in the process."

For this reason, cross-docking continues to generate a lot of discussion among food industry members. And there is plenty to talk about. For starters, there are seemingly endless variations of cross-docking, each with unique benefits and limitations.

The common denominator is the superior information/communication technology required to keep the right product moving in the right quantities and at the right time.

Most operations rely on integrated warehouse management systems (WMS) -- including bar-code technology, radio frequency, advanced shipping notification and electronic data interchange -- to ensure that the required information is accurately exchanged at all points in the supply chain -- and in real time -- from purchasing to final sale.

Anyone interested in WMS software will find no shortage of options -- there are literally hundreds -- though many contain the same basic modules. For purposes of cross-docking, the package should at least feature some form of inbound-scheduling capability that can note the arrival of incoming goods and then assign those items to meet outbound orders. In addition to a cross-docking module, many WMS programs contain a receiving module for assigning bar code labels to inventory, and for scanning the labels with a radio frequency data communication (RFDC) terminal to relay data to the WMS. In the event that storage is required, a storage/putaway module locates, verifies and marks an open storage location for a given pallet or case once it has been scanned with the lift truck's RFDC terminal. With the WMS linking inventory and location, product then can be easily located when needed. After the host computer sends orders to the WMS, a picking module prioritizes orders and picking activities, and then verifies pick accuracy so that inventory data bases remain up to date. Finally, a shipping module generates packing and shipping labels when orders arrive at the shipping station.

Some forms of cross-docking, such as flow-through receiving and shipping, bypass staging and instead employ automated materials-handling equipment, such as conveyors and sorters, to mix and move product to a designated shipping dock. This equipment is typically controlled by Warehouse Control Systems (WCS) software, which use information from the WMS to direct the sorter's programmable logic controllers (PLCs) to move product. The fly in the oinment is that most WMS packages require tweaking in order to interface effectively with sorter controls - a potentially costly and complex proposition. On the other hand, "We're really not inventing the wheel anymore," Schaffer said. "Integrators, WMS providers and sorting equipment suppliers have all been down this road before and often times they've been down it together."

SIDEBAR:
Selecting a WMS

According to Burt Schaffer, managing principal of management consultant Tompkins Associates, a WMS package for a typical cross-docking operation requires several components, including:

  • Receipt of the notification from the supplier by way of EDI of the shipping time, date, carrier, SKUs, quantity, and bar coding information for each order.

  • Receipt by EDI of the scheduled arrival time and date from the carrier

  • Receipt by EDI of order detail from the customer

  • Notification by EDI of the shipping carrier pick-up time, load description, destination, and delivery date and time

  • Notification of the customer by EDI of shipment detail, carrier and arrival date and time.

  • Selection of dock location for the receiving and shipping trucks.

  • Recording of the bar code on each pallet received

  • Comparison of the received pallet bar code to the receiving EDI

  • Identification and notification of receiving variances

  • Supervisory control of sortation and other equipment

  • Creation and tracking of bar code and other label information for application to cases and pallets

  • Direction of personnel for moving material

  • Tracking and reporting of supplier and carrier performance

  • Tracking and reporting of warehouse performance, including labor utilization

  • Planning of operations, including manpower and dock utilization

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