Understanding Cross-Docking and Dropshipping
📦 Logistics Models: Cross-Docking and Dropshipping
Cross-docking and dropshipping are both methods used to minimise storage time and inventory handling, but they involve different parties and processes.
1. Cross-Docking
Cross-docking is a logistics process where incoming goods are moved immediately from a receiving dock to an outbound shipping dock with minimal or no intermediate storage.
Process: Goods arrive from a supplier, are immediately prepared for their destination (often consolidated with other shipments), and are sent out, typically within 24 hours.
Goal: To serve as an efficient intermediary point, optimising the flow of goods between centres and accelerating delivery to the customer.
Inventory Status: The inventory is owned by you, but its time in your warehouse is negligible.
Optiply and Cross-Docking Inventory
For Optiply to manage cross-docked inventory, the stock must be booked into your WMS/ERP system when it arrives and booked out immediately when it ships. Optiply uses the same rules as standard inventory:
Purchase Advice: Optiply will continue to generate purchase advice based on forecasted demand, taking your agreed-upon supplier Lead Time into account.
Stock Levels: Because the inventory exists briefly in your system, Optiply will factor in the on-hand stock position, but its sales velocity will typically necessitate rapid reordering.
2. Dropshipping
Dropshipping is an e-commerce fulfilment model where the retailer (the web store) sells products without ever holding the physical inventory.
Process: When a customer places an order, the retailer purchases the item from a third-party supplier (the dropshipper), who then ships the product directly to the end consumer.
Goal: The retailer avoids the financial risk and costs associated with holding stock, storage, and fulfilment.
Inventory Status: The inventory is never owned by or stored in your warehouse.
Optiply and Dropshipping Inventory
Dropshipping products must be configured correctly in Optiply to ensure accurate purchasing and forecasting:
Set Lead Time: The lead time should reflect the time it takes for your dropshipper to process the order and deliver it to the customer.
Avoid Stock Monitoring: Since you don't hold the stock, Optiply generally treats these items as having continuous availability, focusing only on the purchasing advice required to place the fulfilment order with the supplier/dropshipper.
Risk: Your influence over the logistics process (speed, packaging, quality control) after the order is placed is minimal, as it is managed entirely by the supplier.
❓ Frequently Asked Questions (FAQs)
Can I use Optiply to manage both dropshipping and stock-holding products?
Yes. Optiply is designed to handle hybrid fulfilment models. You simply need to ensure that the settings (especially lead times and stock visibility) are configured appropriately for each product group.
Does Optiply automatically know if a product is dropshipped or cross-docked?
No, Optiply relies on the configuration you set up in your product database and supplier settings. You must ensure the supplier data reflects whether stock is purchased and stored (standard), briefly passed through (cross-docked), or fulfilled by a third party (dropshipped).
What is the main difference between cross-docking and dropshipping for inventory planning?
The main difference is ownership and storage. With cross-docking, you own the inventory, and it briefly passes through your control. With dropshipping, you never own or store the inventory; the supplier handles the entire fulfilment process.
If I use dropshipping, do I still need to track sales history in Optiply?
Yes. You still need to track the sales history of the dropshipped product. Optiply uses this history to forecast future demand, which helps you anticipate when and how often you need to place fulfilment orders with your dropshipper.