Accounting Best Practices, Fifth Edition

16–41. Cross-Dock Inventory

As noted under the “Drop Ship Inventory” best practice, there are a great many inventory transactions and physical moves required if an item is brought into a warehouse, stored, retrieved, and shipped. All these moves introduce the possibility of creating an incorrect transaction or damaging items. Though the drop shipping approach completely eliminates this problem, it is not always possible to do so, either because suppliers refuse to ship direct, container sizes must be reconfigured prior to final delivery, or items from multiple suppliers must be combined into a single shipment.

If drop shipping is not possible, cross-docking may be an alternative. Under this approach, items arrive at the receiving dock and are immediately shifted across to a shipping dock for immediate delivery. By doing so, the only inventory transactions are for receiving and shipping, while the only inventory move is from one dock to another. There is no quality review, putaway, or picking transaction at all. Because of these missing transactions, the use of warehouse staff is kept to a minimum.

To make cross-docking work, inbound deliveries must have a high enough level of product quality to eliminate the quality assurance review, which would otherwise create a potential delay in the delivery of shipments to customers. Also, there must be excellent control over the timing of inbound deliveries, so the warehouse manager knows exactly when items will arrive. This is especially ...