Cross-docking and traditional warehousing : a simulation study

Abstract

Ever increasing competition in manufacturing industry demands optimization of all activities from inbound logistics to outbound logistics. Industry is always looking for more effective, low-cost and fast solutions to keep up with the volatile demand and increasing competition. Cross-docking is among the best candidate to replace the traditional warehousing operations with speed and low operation cost. Cross-docking is defined as a technique used in warehouse management to minimize the material handling, inventory and non-value adding processes inside warehouses. Cross-docks act like transshipment facilities where arrivals are sorted and consolidated with other arrivals from different sources and loaded to outbound carriers at different points in the supply chain. The storing and picking functions are eliminated; hence, goods remain inside the warehouse only for a limited period (most of the time, less than a day). Hybrid warehouse is a modified version of traditional warehouse in which the storing and cross-docking activities are employed to minimize the out of stock situations and increase the speed of operation. The safety stock prevents the loss of sales due to sudden spikes of demand and supply variations.