Tactical Supply Chain Management

By Martin Murray
(Cross Docking in the Warehouse)
Introduction
The term cross docking refers to moving product from a manufacturing plant
and delivers it directly to the customer with little or no material handling in
between. Cross docking not only reduces material handling, but also reduces the
need to store the products in the warehouse. In most cases the products sent from
the manufacturing area to the loading dock has been allocated for outbound
deliveries. In some instances the products will not arrive at the loading dock from
the manufacturing area, but may arrive as a purchased product that is being re-sold
or being delivered from another of the companys manufacturing plants for
shipment from the warehouse.
Benefits
Many companies have benefitted from using cross docking. Some of the
benefits include:
Reduction in labor costs, as the products no longer requires picking and put
away in the warehouse.
Reduction in the time from production to the customer, which helps improve
customer satisfaction.
Reduction in the need for warehouse space, as there is no requirement to
storage the products.





Types of Cross Docking
There are a number of cross docking scenarios that are available to the
warehouse management. Companies will use the type of cross docking that is
applicable to the type of products that they are shipping.
Manufacturing Cross Docking This procedure involves the receiving of
purchased and inbound products that are required by manufacturing. The
warehouse may receive the products and prepare sub-assemblies for the production
orders.
Distributor Cross Docking This process consolidates inbound products from
different vendors into a mixed product pallet, which is delivered to the customer
when the final item is received. For example, computer parts distributors can
source their components from various vendors and combine them into one
shipment for the customer.
Transportation Cross Docking This operation combines shipments from a
number of different carriers in the less-than-truckload (LTL) and small package
industries to gain economies of scale.
Retail Cross Docking This process involves the receipt of products from multiple
vendors and sorting onto outbound trucks for a number of retail stores. This
method was used by Wal-Mart in the 1980's. They would procure two types of
products, items they sell each day of the year, called staple stock, and large
quantities products which is purchased once and sold by the stores and not usually
stocked again. This second type of procurement is called direct freight and Wal-
Mart minimize any warehouse costs with direct freight by using cross docking and
keeping it in the warehouse for as little time as possible.
Opportunistic Cross Docking This can be used in any warehouse, transferring a
product directly from the goods receiving dock to the outbound shipping dock to
meet a known demand, i.e. a customer sales order.


Products Suitable for Cross Docking

There are materials that are better suited to cross docking than others. The list
below shows a number of types of material that are more suited to cross docking.
Perishable items that require immediate shipment
High quality items that do not require quality inspections during goods
receipt
Products that are pre-tagged (bar coded, RFID), pre-ticketed, and ready for
sale at the customer
Promotional items and items that are being launched
Staple retail products with a constant demand or low demand variance
Pre-picked, pre-packaged customer orders from another production plant or
warehouse

Tactical Supply Chain Management
By Martin Murray
Introduction
Tactical supply chain decisions focus on adopting measures that will
produce cost benefits for a company. Tactical decisions are made within the
constraints of the overarching strategic supply chain decisions made by company
management.
The strategic supply chain decisions cover the breadth of the supply chain
for the entire company. Tactical supply chain decisions take the strategic message
and focus on creating real benefits for the company
1. Manufacturing

Strategic decisions may be made by company executives about the number
and location of manufacturing sites to be operated. However, it is at a tactical level
that decisions are made on how to produce the products are the lowest cost.
Tactical decisions may be made as to the adoption of manufacturing methodologies
such as kanban or just-in-time. Tactical decisions may be required at a regional
level by using technology that is available that reduces material wastage, but
cannot be exported to other manufacturing plants.
2. Logistics
Although strategic company decisions may require an in-house logistics
function to be operational, a tactical decision may be required to use a third party
logistics company in a region or country where transportation costs are high and
cost benefits can be achieved by outsourcing. Similarly in countries where land
costs are high, construction of warehousing facilities may be cost prohibitive and
despite not following the strategic vision, a tactical decision is made to use public
warehousing.
3. Suppliers
Many companies recognize the cost benefits of using global suppliers and
adopt strategic supply chain policies to take advantage. At a tactical level,
management has to work within strategic guidelines to identify and negotiate the
terms that will realize the greatest cost benefit across the company.
4. Product Development
Companies make strategic decisions on the product lines they are committed
to producing. Tactical decisions have to be made as to the particular products that
should be developed. If a company makes a strategic decision to introduce a new
line of MP3 players in Europe, the company has to make tactical decisions
regarding the specifications of the players, what countries they will be sold in and
the market segment they will targeted at where the most profit can be achieved.