TAMPA, Fla. -- Shaw's Supermarkets, East Bridgewater, Mass., is seeking to expand on all three variations of cross-docking it now practices.
The retailer currently cross-docks 5% to 10% of its weekly grocery shipments -- mostly high-volume, full-pallet merchandise -- and sees future opportunities in areas like direct-store-delivery, said James Sheehan, director of logistics.
The benefits of a sizable cross-docking program stand to be tremendous, he said.
"We can reduce 75% of the cost of putting a case through distribution by going across the dock," Sheehan said, because putaway, letdown and selection represent the vast majority of costs.
Sheehan spoke earlier this month at a conference here called "Meet Retailers' Demands Through Cross-Docking Execution," sponsored by The Marketing Institute, New York.
The retailer said it is now conducting three different kinds of cross-docking:
· True Cross-Docking: Cross-docking in its purest form, where products are simply taken off one truck and placed on another. "It has the maximum benefits, but there are not many items that fit this criteria," Sheehan said.
· Semi Cross-Docking: Merchandise is unloaded and left on the dock until the outbound truck arrives. There is the risk of cluttering the dock, however, he noted. "The problem is that it butts heads with other efficiency concepts we have."
· Near Cross-Docking: Products are stored in a holding area upon arrival, where they are added to existing pallets that will be shipped out. "This is probably our most effective use of cross-docking," Sheehan said. "While it's not truly a cross-dock," it accommodates the widest range of items.
The retailer considers its "true cross-dock" distribution of bottled water, which makes up about 1% of its shipments, to be one of its most successful initiatives.
"The No. 1 moving item we have is water: 1 million cases a year and two to three pallets per store each week," Sheehan
said. "Anybody could cross-dock that item."
Other cross-docked products include paper, sugar, potato chips and cereals. These products are cross-docked weekly, leaving a week's worth of movement in store back rooms.
While stores do sacrifice some back-room space for the products, Sheehan said that makes more economic sense than traditionally handling and storing the high-volume merchandise at the warehouse.
Shaw's has also successfully cross-docked items featured in holiday-based promotions. Through cross-docking at the warehouse level, stores may receive 40% to 75% of all the merchandise ordered for promotions days before they begin.
Thanksgiving programs in particular have been a success, Sheehan said, with a great majority of items like turkeys, whipped cream and pies cross-docked to stores. "We're putting most of our efforts into promotional products," he said.
With its variety of cross-dock initiatives now established, Shaw's is now on the lookout for additional opportunities. The retailer is especially intrigued with cross-docking items traditionally received via direct-store-delivery.
"DSD items could be the No. 1 cross-dock items," he said. "We'd like to take [DSD items] into central distribution."
Another cross-docking opportunity could emerge with one of Shaw's private-label suppliers, he said. Although some private-label products are not usually viewed as candidates for cross-docking, Shaw's may consider expanding into that area because the retailer has greater control over shipment sizes and arrivals than it has with other manufacturers, Sheehan said.