Lecture 7

Question 1

› Name the advantages and disadvantages of direct distribution.

Answer 1

+
Faster transportation times
Faster transportation handling for supplier

-
Limited economies of scale
Higher transportation costs
Higher complexity (more trucks to handle)

Question 2

› Name the advantages and disadvantages of warehousing.

Answer 2

+
Higher customer service (products on hold close to customer)
Optimized transportation costs (full truck load shipments)

-
Additional inventory and warehousing costs (facility, space
and handling)

Question 3

› Differentiate between single-level and two-level cross docking.

Answer 3

Single-level cross docking
› Direct flow of goods from inbound to
outbound areas without change of load
unit and without change of quantities
› Often used for distribution of super FMCG

Two-level cross docking
› Goods arriving in full load units for
multiple delivery locations
› Repacking, change of load unit and
quantities
› Often used for distribution of medium &
slow movers

Question 4

Name the premises of cross docking.

Answer 4

• Sufficient amount of docks
• Half-automated processes
• Coherent Tags
• EDI usage
• Reliable carriers

Question 5

List the benefits of cross docking and briefly define the concept.

Answer 5

Cross docking is the direct flow of goods from the receiving area to the shipping area in the distribution center, with a minimum dwell time and as little handling and storage in between as possible

› Reduced inventory levels along the entire
supply chain
› Improved economies of transportation
costs due to consolidation of less than
truck load (LTL) to FTL shipments
without increasing the average inventory
level
› Optimized material flow and lead time
› Due to reduced storage time increased
product shelf life
› Less warehouse facilities needed and
optimized operations

Question 6

Strengths of cross docking?

Answer 6

Cross docking improves the quality while reducing costs and processing time.

Costs
› Lower capital lockup
› Reduction of process costs
› Reduction of holding costs
› Reduction of transport costs
› Higher capacity utilization

Quality
› Improved customer service
› Customer has less arriving trucks to handle
› Reduction of CO2-Emission

Time
› Lower processing time
› Lower order cycle time
› Faster transshipment

Question 7

Weaknesses of cross docking?

Answer 7

High effort is needed for the implementation of cross docking.

Costs
Investments necessary, to implement
› High product volume necessary, to reach
cost efficiency

Quality
› Higher IT-requirements
› Integration of all Supply-Chain partners necessary
› Some suppliers might not be able to send order picked pallets

Time
Delivery dates must be strictly adhered to

Question 8

Opportunities of cross docking?

Answer 8

Cross docking allows the adaptation of the supply chain to new requirements such as faster time-to-market times and shorter delivery times.

Costs
› New investments possible through
released capital
› Higher competitiveness through cost
advantages

Quality
› Higher competitiveness through higher quality
› Competitive advantage regarding FMCG thanks to
fresher goods
› Minimization of out-of-stock situations

Time
› Higher productivity
› Faster reaction to market changes

Question 9

Threats of cross docking?

Answer 9

The supply chain must work as one unit. If one supplier is not able to fulfill the requirements, the implementation is endangered.

Costs
› Higher dependency due to investments
for implementation
› Further investments through
procurement of additional trucks

Quality
› Non fault-tolerant system
› Unsolved problem if supplier cannot send order picked pallets

Time
› High implementation effort
› Fluctuation of product volumes

Question 10

Briefly explain the example of the ReweGroup. [Cross Docking]

Answer 10

Each year, about 440,000 tonnes of fruit and vegetables from Germany and the entire world are delivered to ensure that all REWE and PENNY
stores have a wide range of fresh products.

Benefits through central hub system
› Regional warehouses enabled to cut back
on the comprehensive supply of fruit and
vegetables
› Planning for the required amount of
produce improved
› Smaller inventory reduces the use of
energy needed
› Suppliers only need to deliver to the
central hub system
› Spoilage rate in the region east was cut by
more than 30 percent