Layout and control policies for cross docking operations

Abstract

Many supply chains strive to shorten the time between a customer’s order and the actual delivery of the ordered goods. Cross docking is one of the options to reduce these response times. Cross docking facilities are dynamic environments where products arrive and leave the same day. To deal with these dynamic aspects, the need for efficient control policies in combination with flexible and easy to reconfigure storage area layouts increases. We present a dynamic design methodology to select control policies and determine layout rules for cross docking facilities. We present both advantages and disadvantages of the proposed layout procedures. We use the cross docking center of the “Royal Horticultural Company Lemkes” in The Netherlands as the basis for a comparative analysis of the procedures presented. We show that, by applying our design methodology, a savings of 16% can be obtained in total travel distances of employees.

Introduction

Regardless of the supply chain – mobile phones or groceries – the goal is generally the same: to shorten response times. Response times consist of production, handling and waiting times. The reduction of response times is increasingly important from the perspective of cost reductions and customer service improvement (De Treville, Shapiro, & Hameri, 2004). Any of the three components of response time are fair targets for reduction. An important reason for the occurrence of waiting time in supply chains is the storage of products in warehouses. A very large reduction of waiting time in the warehouse – from weeks or days to just hours – can be obtained if loads from incoming trucks are directed to departing trucks with (almost) no storage in-between. Loads can be stored on the floor between unloading and loading for a few hours to wait for a truck to pick them up. This concept is called cross docking (Schaffer, 1998).

Usually, the storage time in cross docking is less than 24 h (Yu & Egbelu, 2008). Obvious candidates for cross docking are products that have already been ordered by the final customer before transportation from the manufacturer to the warehouse has started. Other candidates for successful cross docking are products with short delivery times, products with high demand and products with highly predictable demand (Richardson, 1999). A cross docking facility is usually part of a larger distribution network in which trucks operate (e.g., Musa, Arnaout, & Jung, 2010). A cross docking facility typically consists of a number of dock doors, where trucks can load or unload. Each arriving load that cannot be directly transshipped to another truck is stored in a storage area. The typical storage area for a cross docking center consists of an open area where loads can be stored on the ground. Sometimes, loads may be stored on top of each other, or racks may be used. In any case, loads must be easily accessible, because the time before departure is so short. In this paper, the main question is how to design the storage area for cross docking such that handling and waiting times are reduced.

In general, the design of a facility includes many aspects. Very roughly, we may distinguish three phases in designing facilities. The first phase consists of determining the block layout, which places the various areas within the facility (e.g., Aiello et al., 2002, Meller and Gau, 1996). For cross docking facilities the main areas to position are the dock doors and the storage area. The second phase consists of determining the detailed layout of each of the areas. The third phase consists of finding control policies to control the processes both at a facility level as well as for separate areas. Although often presented as a top-down approach, it is important to acknowledge that the three phases influence each other. Meller, Kleiner, and Nussbaum (2004) recommend modeling constructs that merge the area design (second phase) into the block layout design (first phase). Roodbergen, Sharp, and Vis (2008) show the interplay between the optimal layout (second phase) of an order picking area and the control policy (third phase) used in the optimization procedure. It may therefore also be important for cross docking facilities to take the control policies (third phase) into account while designing the layout of each area (second phase).

A good layout for the storage area of a cross docking center allows easy access to the loads and fast transportation of the loads to the loading dock. It seems therefore reasonable to focus on travel distance minimization. The travel distance in cross docking facilities depends on the layout, but also on the control policies. So far, the issue of determining the layout of a storage area in a cross docking facility while concurrently taking the selected control policies into account has not been studied in literature as will be shown in Section 2. The objective of this paper is to derive a dynamic design methodology and several layout procedures which can solve the decision problem of determining an efficient layout for the storage area, while taking the selected control policies into account.

In Section 2, we present some background information on designing storage areas in cross docking facilities. Section 3 proposes a design methodology that determines the layout of a storage area given selected efficient control policies. Main components of the methodology are several layout procedures. In Section 4, we derive these layout procedures varying from fixed layouts to flexible layouts that can be changed on a daily basis. Furthermore, we present advantages and disadvantages for each of these methods. In Section 5, we apply the methodology in a proof of concept to design the cross docking operation for houseplants of the “Royal Horticultural Company Lemkes” in The Netherlands. Section 6 includes our conclusions.