February 2015 – One of the biggest challenges facing local small and mid-sized producers and large-scale “mainstream” buyers (grocery chains and wholesale distributors) is how to move smaller volumes of source-identified product from farm to point-of-sale at a price that keeps everybody along the supply chain in business. NC Growing Together is working to develop and test possible solutions, and two new NCGT reports get at the heart of this procurement and distribution challenge. Completed by teams of MBA students at NC State University with guidance from NCGT staff and partner organizations, both utilize the concept of “cross docking”.
Cross docking is a distributional strategy in which products received at a centralized distribution location do not enter the warehouse stock or “slots”, but instead are immediately shipped out as-is to another location. Cross docking can trim costs while maintaining source-identification, because product does not enter the warehouse inventory system. In a normal warehouse scenario, product enters a warehouse and is placed into inventory “slots”, with a first-in, first-out “picking” strategy that co-mingles products (and their origins). To learn more about this system, please see NCGT’s Process Walkthrough at a Regional Produce Distribution Center.
The first report, Cost Analysis for a Cross Dock Alternative to Supply Local Produce from Food Hub to Grocery Store via a Large Regional Distribution Center explores the use of cross docking to move pallets of produce, pre-packed at a food hub or other aggregation site to the specifications of a given grocery store, to the grocery chain’s regional distribution warehouse. These mixed pallets (“mixed” because they contain more than one type of produce item) are then cross docked: they do not move into the warehouse inventory, but are immediately put on outgoing trucks with other items from the warehouse as ordered by the store.
The project report considers various factors that affect the cost-per-item breakdown, including different numbers of cases, different numbers of stores, and different ways to transport the product. Cross docking is an accepted practice among wholesale distributors, and seems to have promise for creating win-win supply chain connections for local farmers and mainstream buyers.
The second report, Siting and Cost Analysis for a Cross Dock Consolidation Center for Local Produce, analyzes the costs of creating a Cross Dock Consolidation Center (CCC), a type of infrastructure that could be used to aggregate products from a number of small and mid-sized produce growers in the same area so they can be cooled and stored for pick-up from a partner wholesale distributor. Since wholesalers are unable to pick up smaller loads of product cost-effectively, a central aggregation/cooling/storing location is attractive.
Here again, the solution is cross docking. Farms can deliver product packed and ready to be shipped out on the wholesaler’s truck. The facility cools and stores the product, but does not wash, grade, or repack, thus eliminating the labor and facility costs associated with these services. The team analyzed different possible locational scenarios, either retrofitting an empty warehouse, or adding on to an existing farm operation. The costs for each of these are included in the report. The team also used GIS to analyze the best location for a potential Cross Dock Consolidation Center based on the goal of sourcing product from farms in the Fort Bragg area.
Both reports can also be found on the Research page.
NCGT will continue to support student research teams in the 2015-2016 academic year and beyond. Contact Project Research Coordinator Rebecca Dunning for more information and how you can be involved.
This article originally appeared in the February 2015 NC Growing Together Newsletter.