The design principles and success factors for the operation of cross dock facilities in grocery and retail supply chains
Dissertation (PhD)--Stellenbosch, 2004.
ENGLISH ABSTRACT: The dissertation reflects the research done on the design principles and success factors for the operation of cross dock facilities in grocery and retail supply chains. The cross dock is a particular facility in the supply chain where goods are received from suppliers, sorted without storage of the goods, and then efficiently moved to downstream customers. Cross docks are not a new operation. However, the use in high volume grocery and retail operational capabilities is poorly understood and is not uniquely defined. The problem is that cross docks are often seen as extensions of warehouses. The same personnel, systems and processes are applied and the efficiency potential of the cross dock is not achieved. Warehouses are orientated towards storing the full range of product and allowing the pick to be done from this storage buffer to provide any or all of these products to a customer. Cross docks will only handle products that are used in larger quantities and that are sent to most, if not all, the customers. The cross dock is therefore distinct and very different from the traditional warehouse. The published research tends to focus on the technical aspects of the cross dock layout. This research is primarily in the scheduling of the trucks into the yard of the facility; the allocation of trucks to specific doors of the facility; and the allocation of doors to receiving and despatch functions within the facility. Very little information or research reflects the design principles and success factors for the cross dock and its supply chain. The only classification of the cross dock in the literature is whether the barcode is added to the item before or after receipt at the cross dock. For this research work a literature survey was conducted and five major operations were reviewed, in South Africa and the USA. The research empirically drew logical conclusions, which were tested in the operations and found to be correct. This allowed the design principles and success factors to be determined for a successful cross dock. The research extends the knowledge of the cross dock operation and design: - • A new classification for the feasible types of cross docks in the supply chain was developed. Three factors are shown to be of primary importance: - o Where in the supply chain the identification of specific items for a customer is done; o Where the sort is done for the items to be delivered to a customer; and o Whether the supplier is providing one product or multiple products to the sort. From these three factors, eight potential classifications could be defined. However, only three practical types of cross dock can be determined from these eight alternatives. These are named in this research as Cross Dock Managed Load (CML); Joint Managed Load (JML); and the Supplier Managed Load (SML). The cross dock is far more effective than the warehouse when the total work (excluding inventory) is considered. The earlier in the supply chain the product is identified for the use of the entire downstream supply chain, the more effective will be the total supply chain. Thus the greatest supply chain effectiveness possible is with the SML, then the JML and finally the CML. • The operation of a cross dock is very similar to a continuous manufacturing process. There is no buffer of stock to decouple the inbound and outbound processes, and the operation takes place in a restricted area. However, in the retail chain, the workload alters with different orders and different days. Daily load differences vary by as much as 90%. This results in vastly different workloads and variations of throughput. This is similar to a batch operation with highly variable workloads between batches. The literature recommends the use of Just in Time (JIT) practice for cross docks. This is inappropriate as its primary requirements are continuous full volume operation and continuous small improvements to achieve a balanced operation. The most appropriate method of process improvement is the Theory of Constraints (TO C) and not JlT. • The management must have a detailed, disciplined approach. This implies standardised methods of operation, and a high degree of training. Equally there is the requirement for a special type of personnel to operate the cross dock. These operating personnel must be able to operate with precision (i.e. very low error rates) and be able to maintain this capability for continuous periods. • The systems required for a successful operation must include the capabilities of Yard Management, WMS for cross docking, Order Management with Advanced Shipping Notice (ASN) capability and Track and Trace across the supply chain. The items need to be identified by a barcode. The information required on the barcode will be determined by. the information systems capability of the least advanced service provider in the supply chain. If this service provider can receive and transmit all the data required for the supply chain from and to the other members, then the barcode need only be an identification number of the specific item. The data pertaining to the items is then passed from system to system in the supply chain. If data movement is not possible between all the parties in the entire supply chain, then the barcode must contain the information that will identify the item, the origin and the final delivery destination. If the items are delivered as part of a consignment, a further quantum of information is required to identify the total number of items in the consignment and the specific item within the consignment. • The research shows that the overall capability of the cross dock or its maximum capacity is the combination of the capability of the personnel and the cross dock design. Restrictions on either the personnel capability or the design of the cross dock, or both, severely reduces the effectiveness of the cross dock. • The previous research on the sequence of allocation of trucks to specific doors within the cross dock can be enhanced with a new sequencing method. The new method allocates the transport, in sequence of arrival, to the open door that either numrruses the walk distance in the facility; or maximises the completion of the consignments in order to minimise the area required to build the consignments; or a combination of both. The choice of these will be determined by the constraints imposed by the design of the building. This is an important extension as this ties the supply chain into the cross dock operation, rather than looking at the cross dock in isolation as has been done in this previous research. • The factors that influence the design of a cross dock as to its size, shape, number of doors, and the specifically required additional areas, is defined in detail. The principles of these factors and their inter-relationships and dependencies are used in a detailed design for a cross dock. The detailed design process is set out from data analysis through to the actual size calculations and layouts. Measurements of walk distance and sort movement are used to determine the most effective design. The design is shown to be considerably more effective than the older designs. This work has significantly extended the research on the design principles and success factors for implementation of cross docks in retail supply chains. The research derives a unique new classification for cross docks. An improvement is made to existing research on the allocation of the transport to particular doors in the cross dock. The operation, management and personnel are shown to require specific characteristics. The information systems required for effective cross docks is determined and defined. The identification of the individual items by barcode and the information required within the barcode depending on the information sophistication of the service providers in the supply chain is defined. A detail process to design a cross dock is evolved, with the full knowledge of the factors that must be considered and their interrelationships. Measurements to determine the effectiveness of the design are used to choose the most appropriate design. All these are then synthesised into a new design, which is far more effective than any of the other designs researched. The design process will produce a very effective cross dock as has been demonstrated with a new facility.
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