The Receiving Processes
The warehouse receiving process is a critical part of maintaining inventory systems’ integrity and ensuring that products are available. In the absence of an effective receiving system, items do not receive adequate inspection, and there is no evidence of problems with vendors who impact profitability (Molavi, Shahmardan, & Sajadieh, 2018). Automation of comprehensive management services should be integrated with the business system to limit waste and inefficiencies that occur at the receiving process. According to Bartholdi and Hackman (2019, p. 51), success in receiving warehouse management can have profound impact on the business’s profitability. Receiving is critical in the warehouse as it is the foundation for all the warehouse’s subsequent activities (Martins, Pereira, Ferreira, Sa, & Silva, 2020). For instance, goods should be passed through the receiving process for them to be available as custom orders. This process should be carried out with a high degree of accuracy, ensuring that the correct goods are received and assigned to suitable locations.
Receipt of goods into warehouse should be carefully planned. In large warehouses, loads from vehicles are pre-booked, which aids the allocation of appropriate resources. Chen, Huang, Yu, & Hung (2017, p. 362) analyze the receiving process from when the goods arrive to when they leave the warehouse. The vehicle doors may be sealed, especially for imported goods, and hence the seal number may be checked against the sender’s information for standardization (Custodio & Machado, 2020). When unloading, goods are generally checked to ensure they are the correct items, quality, and correct amount. This process may be undertaken by cross-checking against the purchase orders, though it is time-consuming. Alternatively, the sender can send an advance shipping notice (ASN) where the goods are stored appropriately (Savchenko & Kuzmenko, 2018). The goods are then explicitly checked against the ASN for the vehicle. Long-time suppliers may not be subjected to these measures, but the quantity and quality may be assumed to be similar to the ASN, where the goods are unloaded and stored in the warehouse. If the goods are to be quarantined, the loads are placed in normal reserves and used by the warehouse management system to prevent picking the goods as customer orders. Some orders may require labeling, applying bar codes such as License Plate Numbers (LPNs), palletizing, re-palletizing, and placing them into the tote bins.
These loads are then checked, particularly if they are to be put away into automated storage and retrieval system. For instance, pallets may be subjected to weight checking on a conveyor. They are passed through a checking device that would register any divergence from the permitted dimensions by using photoelectric light (Kłodawski, Lewczuk, Kacyna-Gołda, & Żak, 2017). Pallets that do not match the standards are sent to reject spur on the conveyor for manual rectification. After the goods have been inspected and ready to be stored, they may be put away, and the computer advised to locate the number or manually the warehouse management may find an appropriate space to store the goods (Bartholdi & Hackman, 2019). The receiving process is mainly designed to enable goods to be placed in the warehouse’s proper location within the shortest time possible. Therefore, close coordination with suppliers is highly needed in processes such as procurement agreements and delivery timings.
Well-known companies globally have implemented the use of cross-docking.
Synonymous companies globally have migrated from traditional warehousing to cross-docking. Wal-Mart cross-docking coordinates more than 2000 trucks over an extensive network of warehouses, cross docks, and retail places (Glynn, 2021). Cross-docking elevates material flow controls could involve a fleet of trucks (Jannah, Ridwan & Hadi, 2018). It, however, has to be understood that not all goods can fit in cross-docking. Some companies blend traditional warehousing with cross-docking. Supply chains that use FMCG tend to combine traditional warehousing and cross-docking operations, which is cost-effective due to fast-moving consumer goods. It has to be noted that product distribution strategies depend on myriad factors, including product life cycle, product value, volume, and facility space constraints.
Since cross-docking may present challenges and complexities, companies require approaches to evaluate its effectiveness of cross-docking. In addition, following varied cost structures and limited cross-docking facilities, there lies a challenge in producing a plan to allocate cross-docking products among other warehousing operations (Fathollahi-Fard, Ranjbar-Bourani, Cheikhrouhou, & Hajiaghaei-Keshteli, 2019). Myriad logistic service providers are offering cross-docking services. With the significant steps witnessed in Information Technology (IT), the management of cross-docking has become more accessible (Kusrini, Ahmad, & Murniati, 2019). However, there still lies a challenge in systematic guidance on product allocation planning for cross-docking operations. This work reviews the process of cross-docking, its impact on receipt, and critical performance metrics (KPIs) for improvement. Recommendations are also offered on the approach for allocating products in cross-docking operations.
Warehouse Design and its Impact on Receipt Process
Warehouse layout design is one of the most critical components that impact all warehouse processes. It may seem to be simple, but in reality, it is difficult to figure out. Warehouse designers have to work with space in which some factors limit the available surface area. When designing internal and external warehouse layout, three possible scenarios have to be considered that necessitate space considerations including installation of the new warehouse, an extension of existing facilities and reorganization of those currently operating (Mecalux, 2018). Above all, the general layout of any given facility must cover needs such as making use of the available space, reducing goods handling to a minimum, easy access to stored goods, providing the highest rotation ratio possible, offering maximum flexibility in product positioning and control of goods stored (Mecalux, 2018). To achieve this, the warehouse layout design must be perfectly devised. There are areas that must be properly defined when designing warehouse layout including loading and unloading areas, reception area, storage area, picking rea and dispatch area. It can therefore be argued that a well designer warehouse layout facilitates the receipt process.
Cross-docking-Warehousing in Receipt Section
There is a need for engaging technology in the receiving process to handle services efficiently. Some tasks such as docking can be automated, requiring shippers to notify the receiving department 24 hours in advance of delivery (Benrqya, Babai, Estampe, & Vallespir, 2020, p. 265). This process will ensure that managers of these operations are fully aware of arranging appropriate systems when the arrival of load. The scheduling operation profoundly impacts incoming managing materials, accurate inspection, labeling, and counting (Gaffney, 2021). Cross-docking will be an essential part of managing the receiving process in that materials are immediately sent to another dock for shipment when storing is not necessarily required. Cross-docking, therefore, provides an implementation for dock and storage space for efficiency.
Traditional warehousing meets challenges when it comes to an increased volume of goods and consumer demand. These challenges exert pressure on companies warehousing facilities. As the number of partners and deliveries grows, order volume decreases. With an increased delivery frequency, a shorter time of receiving goods is registered (Benrqya, 2019, p. 432). The working hours prescribed to drivers become stricter, with the lead time becoming even faster (Ahangamage, Niwunhella, Vidanagamachchi, & Wickramarachchi, 2019). The pressure is also mounting on reducing inventory due to associated costs. A trend toward smaller and fewer warehouses has also proved to transfer many warehouse operations to cross-docking operations (Goodarzi., Tavakkoli-Moghaddam, & Amini, 2020). The cross-docking process’s rolling up will be centrally managing inventory via transit from suppliers to consumers (Dixit, Shah, & Sonwaney, 2020). Through the use of Fast-Moving Consumer Goods (FMCG), retailers will order products from suppliers, who will then arrange for truckloads and send them to cross-dock (Theophilus et al., 2021). Workers will then transfer products to trailers bound for individual stores. This means that the outgoing trailers have products for an individual store from many suppliers. In effect, this will cut down costs since in and out shipments are in truckload quantities.
Unit Product Cost for Cross-docking and Warehousing Processes
Products to be cross-docked, however, depend on some factors. A study by Mäenpää (2021) investigates product suitability for cross-docking, which is calculated from a number of facets of the product, including the product demand variation, popularity, cubic movement, product value, and demand variation and Product Life Cycle (PLC). Popularity, in this case, will refer to the demand or the number of times a customer orders it. Products with high popularity mean that the number of times the product moves along the facility is higher than in other products. Ahangamage et al. (2019) note that products with high cubic movement should be assigned through cross-dock since inventory has constraint space. Goods should therefore be arranged for cross-docking following the factors such as popularity. Some of the FMCG products suitable for cross-docking will include pharmaceuticals, soft drinks, consumer electronics, packaged food products, toiletries, and cosmetics.
This, therefore, means that products with more increased cubic movement should be a top priority for cross-docking. Demand variation refers to the patterns of demand for merchandise. Products with high demand are more suitable for cross-docking, facilitating efficiency for this service (Soleimaninanadegany, Hassan, & Galankashi, 2017). In addition, inventory risk and cost for products with higher values and a short life cycle are higher than those with lower value and long life cycle (Kusrini, Novendri, & Helia, 2018). Products with a short life cycle become bad or lose value faster and hence the need to push them on the sales floor (Kiani Mavi et al., 2020). These products can only be distributed through cross-dock (Dujmešić, Bajor, & Rožić, 2018). Product cross-docking suitability is evaluated from the processing cost of the item. Products with high suitability for cross-docking have relatively low processing costs by cross-docking.
Cross-docking for Inbound and Outbound Shipments
Cross-docking of inbound receipts and outbound receipts has gained popularity among big companies. Such organizations use this technique to gain faster flow and optimize all warehouse operations (Chang, Ren, & Wang, 2015, p. 325). With cross-docking, scheduled receipts to inbound shipments can be matched in minutes, hours, or days earlier. As a result, it lowers the cost of handling materials while simultaneously reducing flow-through times. The advanced features of cross-docking supporting all supply and demand orders require the outbound to be released before identifying opportunities in cross-dock (Pete Yu, Ha, & Park, 2021). Some characteristics are marked in the auto release shipment, including supporting only production orders as supply and sales orders and transfers ones as demand (Chargui, Bekrar, Reghioui, & Trentesaux, 2020). However, cross-docking can also be launched even before releasing the demand order to the warehouse, which triggers supply receipt.
Key Performance Metrics in Receiving Process
Key Performance Indicators (KPIs) measure the business’s performance for the organization to benchmark the competition and explore factors for improvement. Warehousing is a critical tenet within the supply chain since, with the ineffective movement of products, the business will experience a fall (Coindreau, Gallay, Zufferey, & Laporte, 2021). In addition, for a continuous improvement setting, benchmarking against industry standards is essential to drive improvements (“9 more warehouse key performance indicators for 2020”, 2020). Metrics to measure receiving performance are among the most crucial KPIs. Sunol (2020b) emphasizes the importance of receiving process since warehouse operations are launched by this process, and inefficiencies registered at this point will snowball the subsequent process.
Receiving functions allow other warehouse processes to receive products against ASN received through Electronic Data Interchange (EDI) and purchase orders from nine more warehouses (“9 more warehouse key performance indicators for 2020,” 2020). The process of receiving involves goods received physically at the warehouse and those delivered directly via cross-decked. Warehouse KPIs in the receiving process will include the cost of movement and inspection of goods. According to Sunol (2020a), some of the most critical warehouse receiving KPIs include the cost of receiving per line, receiving productivity, receiving accuracy, dock door utilization, and receiving cycle time.
The cost of receiving per line involves the expenses incurred on accepting the process of the individual line. It also includes cost handling. Richards (2017) posits that receiving productivity is determined by labor input by enumerating the volume of goods received per warehouse clerk hour. Kłodawski et al. (2017) also investigate the receiving accuracy and note that it will involve accurate receipts against purchase orders. Dock door utilization consists of the number of dock doors utilized in operation. Receiving cycle time affects the time taken to process each receipt.
Recommendations to Improve Cross-docking Efficiency in Receipts Process
Retailers can expand their cross-docking services for effectiveness by integrating with technology involving shipment notifications, barcode reading, warehouse management systems, and material holding. To generate an optimal cross-docking allocation plan at a lower cost while simultaneously meeting demands for products’ operational costs, there is a need for engaging multiple functionalities (Gaffney, 2021). The first step is gaining product information, including the type, client, destination, packing attributes, time, and demand history (Chen et al., 2017, p. 387). With product information comes unit product costs enumerated based on storage, inventory, product outdated costs, and material cost (Sreeshylam, 2016). For instance, products that consume high volume when stored may lead to high warehouse costs. In that case, the facility storage could be left for products with trade-offs in cross-docking and warehousing costs and provide the product allocation. The last step involves the calculation of the optimal allocation plan. Automation of comprehensive management services should be integrated with the business system to limit waste and inefficiencies that occur during the receiving process. Automation of the receipt process will be important to reduce the waiting time for delivery trucks and assist in the arrangement of goods and the inspection process.
In conclusion, cross-docking is essential in the receiving process of the warehouse. The receipt section that involves inbound and outbound shipping activities requires cross-docking services. Traditional warehousing meets challenges when it comes to an increased volume of goods and consumer demand. These challenges exert pressure on companies warehousing facilities. As the number of partners and deliveries grows, order volume decreases. With an increased delivery frequency, a shorter time of receiving goods is registered. The working hours prescribed to drivers become stricter, with the lead time becoming even faster. The pressure is also mounting on reducing inventory due to associated costs. This work recommends cross-docking allocation based on product attributes, including value, demand, price, and cubic space in movement.
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