Question

Cross docking is a distribution strategy that Wal-Mart made famous. Discuss the advantages, disadvantages and characteristics of cross-docking and explain how it can significantly improve Wal-Mart's logistics operations.

Answer 1

Under cross docking, the inbound shipments are unloaded directly onto the outbound traliers at the distribution point. the process saves precious time in the goods changing hands from one party to the other, which lowers the lead time significantly. Cross docking also reduces the number of inefficiencies and damages as the goods does not have to travel much or does not need to be handled much, thereby the opportunities of pitfalls are less. In addition, cross docking saves huge money in warehousing. The rapid movement of goods through cross docking facility not only improves efifciency but also saves money.

The cross docking needs very high level of sophistication to accomplish the processes, usually a technology enabled logistics systems is needed. The partners also need to have their products aligned in suitable format to align to the cross docking needs. The fleet requirement is high. The relations as well as collaboration with suppliers need to be such, so as to facilitate such high performance. The volume of goods needs to be high to achieve economies of scale and derive benefits from cross docking.

Wal Mart has a huge base of dedicated suppliers which enable it to cross dock the goods. The huge scale of operations enables cost effectiveness in its operations. Through effective cross docking the company is able to save huge costs on storage and inventory and reduce the lead time to ensure high asset turnover and enables itself to pass on the savings to customers in from of everyday low price.

The retailer is known for its robust supply chain and its efficiency. Cross docking can further enhance its productivity and cost effectiveness by saving costs which can be passed on to customers to incraese sales, retain the existing customers and attract new ones.