Both cross docking and dropshipping have grown in popularity over recent years. Shippers and distributors enjoy the immense benefits of these fulfillment options. And while the models possess unique savings opportunities, automation is ready to change the game again. Modern supply chain leaders successfully transform more activities into dropshipping and cross dock automation in logistics using automation. Therefore, freight spend declines. Supply chain leaders need to understand the opportunities automation affords to these fulfillment models and how it maximizes their value.
Using cross docking and dropshipping does come with challenges, particularly the need to understand and allocate space for moving freight to one side of the dock or to send order data directly to the manufacturers. That creates risk. As further explained by The Balance Small Business, “Because products aren’t put away in the company’s prescribed fashion during cross-docking, there’s an increased risk related to loss of inventory control by using the method the long term.” However, these risks are acceptable; they involve a lower degree of impact on the customer experience. If the company addresses the problem when loading or unloading, the customer sees a net-zero effect.
Meanwhile, dropshipping failures can tear away at the whole customer experience, resulting in missed deliveries and angry consumers. Now, imagine those processes limited only to emails and a rudimentary plan for which shipments are “shelved” on the side of the dock versus those ready for put-away. Managing both cross docking and dropshipping need an infusion of technology and automation to scale.
Both fulfillment models carry characteristics reminiscent of supply chain processes that are ripe for disruption. It’s worth noting that this disruption is positive—creating new opportunities to add value to the supply chain. Applied automation in either model creates efficiencies in sharing data and helps to identify pallets or items scheduled for redistribution at the dock or fulfillment through dropshipping.
Consider this added effect of e-commerce on these fulfillment models, reported by Inbound Logistics:
“A few decades ago, manufacturer supply chains often included master distributors, distributors, and retailers, explains Tim Brown, managing director of the Supply Chain & Logistics Institute at Georgia Tech. Each party earned a margin, driving up overall costs. For many transactions, e-commerce has made personal relationships less important, and shortened the distribution channel, he adds.
Another change is the consumer-like behavior of many industrial and manufacturing customers. ‘They want their orders fulfilled quickly, at a price they want, and delivered where they want,’ says Adegoke Oke, associate professor of supply chain management at Arizona State University.”
With that in mind, shippers will want to ensure any new use of automation, including use cases for new fulfillment models, works smoothly before implementation.
While cross docking and dropshipping sound simple enough, they represent complex supply chain processes. As such, shippers should follow these best practices when implementing either or both fulfillment models to reduce risk and proactively manage inventory:
The best-laid plans for using RPA or other automated transportation management tech for dropshipping will fail without a scalable TMS. Ensure your company relies on a next-generation TMS that resides in the cloud and follows all the above best practices. And remember that while these new fulfillment models might seem excessive today, their profitability rewards will pay real salaries and faster than any fulfillment from a local center will achieve. It’s that simple.
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