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Cross-docking is a distribution system where storage is eliminated and the goods are directly distributed to retailers or customers. Like any coin, it has two sides. The benefits and drawbacks of the cross-docking distribution system are listed below:

Advantages of Cross-Docking

• Reduces material handling : Sorting, storing, picking and packing are all common inventory handling tasks in traditional warehouse operations. Cross-docking reduces the manual or automatic movement of commodities around the warehouse.
• Reduces material handling damage :- Material handling can cause damage sometimes. The chance of damage deceases as the movement of commodities is reduced.
• Reduces labour expenses : Cross-docking does not completely eliminate the labour cost, but reduces the number of employees required which in turn, reduces the labour cost and also benefits the customer.
• Reduces transportation costs and delivery time : Transport vehicles travel the best and fastest route available and so cross-docking reduces the cost of transportation as there is no stoppage in between. Also, cross-docking facilities are often located near the client’s final delivery destination, thereby reducing delivery time.
• Increases product quality : Workers readily inspect products for damage from transport trucks while staging them (keeping them on the dock momentarily while processing them for shipping). This cuts down on the number of faulty or damaged products sent to customers, saving money on returns and ensuring a higher level of customer satisfaction.
• Reduces storage space and overall fixed expenses : Large warehouses include other permanent expenditures such as equipment and utilities, in addition to storage space. Reduced storage space means less money spent on lighting, heating and equipment, among other things.

Disadvantages of Cross-Docking

• Time-Consuming: Cross-docking can take a long time if it isn’t properly planned, scheduled, and completed. While it appears to be a simple solution, the process in execution might take time to ensure everything goes smoothly.
• Trust towards the supplier : Cross-docking is based on inbound and outbound services, where trust in the team is required. Though there is a little space for errors, capacity to fulfill orders will be hampered if the cross-docker consistently fails to supply the correct products or amounts, losing client trust. It also wastes time and decreases output.
• Requires transport carriers : Cross-dock operations necessitate a high number of transport trucks to service both the inbound and outgoing docks. As it primarily depends on the vehicles, the costs might be higher.
• Capital investment : To establish a successful cross-docking business a large upfront expenditure is required. While cross-dock terminals save the company money in the long run, they are costly to setup to make the transfer of goods go smoothly.
• Risk of Shrinkage : While cross-docking can help reduce damage by reducing material handling, there is still the risk of shrinkage (theft or damage) if proper procedures aren’t followed.

Applying the cross-docking technique alone will can be the right way to improve the efficiency of delivery of goods. However, consider using this facility by keeping in mind both the advantages and disadvantages before making a choice.