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Management article
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Reference no. ICR072D
Authors: Kevin R Gue
Published by: International Commerce Institute
Published in: "International Commerce Review", 2007

Abstract

Warehouses are one of the most glaring forms of waste in modern supply chains. What is more wasteful than tying up huge amounts of money in stock (and in special buildings that cost a fortune to build and maintain), and then spending even more money paying workers to put stock on shelves only to take it off again? That''s why more and more companies are taking an interest in crossdocking, where stock coming off one truck goes straight onto another truck, to reach its final destination with minimal delay. But crossdocking is not a panacea. If a product has high, stable demand it might be better for a supplier to ship direct to its customers'' stores. If demand is highly variable and the costs of stock-outs are high then holding buffer stock in warehouses may still be the best approach. And if crossdocking processes are not implemented well, they can cause more problems than they solve. Deciding when - and how - to crossdock therefore requires a careful analysis of many different factors. If experience in the US is anything to go by, we won''t be waving goodbye to the warehouse any time soon.

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Abstract

Warehouses are one of the most glaring forms of waste in modern supply chains. What is more wasteful than tying up huge amounts of money in stock (and in special buildings that cost a fortune to build and maintain), and then spending even more money paying workers to put stock on shelves only to take it off again? That''s why more and more companies are taking an interest in crossdocking, where stock coming off one truck goes straight onto another truck, to reach its final destination with minimal delay. But crossdocking is not a panacea. If a product has high, stable demand it might be better for a supplier to ship direct to its customers'' stores. If demand is highly variable and the costs of stock-outs are high then holding buffer stock in warehouses may still be the best approach. And if crossdocking processes are not implemented well, they can cause more problems than they solve. Deciding when - and how - to crossdock therefore requires a careful analysis of many different factors. If experience in the US is anything to go by, we won''t be waving goodbye to the warehouse any time soon.

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