What is Pool Distribution?

Pool distribution is a form of shipping that allows companies to ship their products along with other orders in a single truck. This strategy is similar to less-than-truckload (LTL); however, you would be pooling multiple shipments of your products rather than sharing the load with other brands. 

For anyone looking to reduce costs and improve transit times, the pool distribution model is one of the most practical solutions.

 

What is Less-than-truckload (LTL) shipping?

LTL is a shipping option that allows companies to pay only for the portion of the trailer they use rather than the entire truck. The remaining space will be filled with goods from other companies heading to the same area. 

 

Pool Distribution vs. Pool Consolidation?

Pool distribution allows you to “pool” your shipment together with other loads that are being delivered to multiple destinations within the same region.

Shipments that would usually be shipped through LTL shipping can be pooled together or consolidated onto a full trailer. Next, they are delivered to a distribution center offloaded, and sent to their final delivery.

You can utilize pool distribution at both ends of the shipping lane — the origin and destination. The beginning of the trip is called pool consolidation. Whereas pool distribution refers to the end portion, when the shipment is removed from the truck, scanned, and delivered to its final destination.

 

How Does Pool Distribution Work?

Usually, pool distribution involves consolidating multiple shipments from a single shipper at one point of origin — typically the shipper’s distribution center. The load as a whole will be going toward a specific geographic region, with multiple delivery points within that region for individual shipments.

Shipments are consolidated and loaded onto a truck to make maximum usage of the space. Next, it goes to a pool point facility (aka a regional terminal) or distribution center, instead of directly to the final destination. The pool shipment will then be offloaded, scanned, and organized by where the freight is headed. Your shipments are then reloaded onto smaller, local delivery trucks or vans for their final mile delivery.

In some cases, a company may not have enough product to make pool distribution a good option. Instead, the pool might share a truckload cost with another pool from a different company. When this occurs, the truck will stop at both distribution points to load in the shipment and then go to a single final delivery point, meaning the two pools are being shipped to the same retailer.

Pool distribution can often offer significant cost savings to traditional LTL shipping. Benefits include significantly reduced shipping times, less handling of your products, keeping them safer, and visibility to track your shipment throughout the entire journey.

A pool distribution strategy is more common on a smaller scale; however, larger companies can benefit from this shipping method. The right partners will have a set of network points and distribution centers to unload trucks and sort items for distribution. 

Using an experienced partner for pool distribution is valuable because they will already have the systems and right personnel in place, particularly for shipments that require special vehicles such as smaller vans or trailers with lift gates. An experienced partner will also have  the right floor personnel needed to receive deliveries with the necessary know-how to use any specialized equipment.

 

When To Use Pool Distribution?

You may have already used pool distribution in some form. For example, if a retailer asked you to consolidate your orders onto pallets and ship them via LTL instead of parcel delivery. 

Companies with a high frequency of consistent, LTL-size shipments are best suited to use a pool distribution strategy. It is dependent on the size and the circumstances of your orders. 

While smaller companies may be better suited for pool distribution, you still need a certain level of volume for it to bring value to your business. To benefit from the value that pool distribution brings, companies need to have enough sales volume and shipments to a specific geographic region. If a company doesn’t have enough product to fill a truck, it is most likely better suited for LTL shipping than pooling. Working with an experienced third-party logistics provider is crucial because they can provide an established carrier network to help identify the best strategy to bring value to your supply chain. Particularly for companies lacking the infrastructure or the systems to coordinate pooling.  

 

What is Pool Consolidation?

Pool consolidation is part of the pool distribution process at the shipping lane’s beginning. With consolidation, multiple vendor shipments are consolidated onto a single truckload to a distribution center. The lane’s pool distribution portion occurs as the shipments are separated and sent to their final destination.

Other times, pool consolidation is not paired with pool distribution. In these cases, the vendors that share the truckload are all going to the same retailer or other location, creating no need for distribution at the end.

Companies typically use third-party logistics providers to handle their shipping as there is a lot of coordination that goes into pool consolidation. The planning process considers many factors, including delivery dates, shipping schedules, and truck availability.   

Pooling saves time at both the beginning and the end of a shipment’s journey. You can load your entire shipment into a single truck rather than in pieces, and on the other end, it only needs to be unloaded once. This means fewer receiving doors are required, and fewer workers are required to unload the shipment. 

Pool Consolidation

The Benefits Of Pool Distribution

  1. Reduced Shipping Costs: Pool distribution is typically more efficient than other shipping options as it removes the need for multiple legs on the journey. With shipping, the most costly miles for a truck are the first and last few miles. 
  2. Straightforward: Usually, pool distribution cost is based on just weight and miles, meaning it does not require complex formulas and more straightforward to calculate the costs.
  3. Supply Chain Visibility: Pool distribution makes it easy to track your shipment as it will be making fewer stops. 
  4. Speed: Pool distribution is typically faster as your shipment will be making fewer stops. 
  5. Lower Carbon Footprint: By placing fewer trucks on the road, you are doing your part to reduce your companies’ carbon footprint. 

 

Why Pool Distribution Might Not Be Right For Your Business

  1. Requires Change: Some companies may not be willing to change processes, schedules, or volumes to make pool distribution work. 
  2. Filling the trucks: You want to make sure you can fill the trucks with your pooled shipment consistently. Otherwise, pool distribution will have minimal value as part of your supply chain. 
  3. Right Partner: You want to ensure your 3PL/ 4PL partner has an established network in the regions you wish to send your pool shipments. 
  4. Product Pooling: Ensure the products you pool together make sense to be on the same truck. Depending on your products, some items may require special handling or shouldn’t be pooled together pending your products’ nature. 

 

Implementing pool distribution will require a lot of initial work on your end, but once you have systems in place with the right shipping partner, it will be worthwhile for your company. 

 

Technology Drives Supply Chain Visibility

Anyone who’s ever taken a driver’s education class should be familiar with the notion of reaction time and the importance of good visibility. The further you can see, and the clearer your visibility, the better you react to the conditions ahead of you. Bad visibility can be calamitous to a driver, and the same can be true when applied to a business lacking visibility into their supply chain.

A high level of supply chain visibility is a cornerstone of the modern logistics business. Particularly with the growth of companies operating at an omnichannel level, the need to understand where inventory is at any given time is vital for effective operation, problem-solving, planning, and, ideally, optimization.

Companies trying to keep pace with supply chain demands accelerated by COVID-19 better supply chain visibility can defend against difficulties created by unexpected circumstances. On better days, it can become a competitive advantage. Who wouldn’t want in-transit transparency on their inventory and the ability to keep customers up to date on its movements? But getting that visibility can be a daunting process. In a recent study, 40% of supply chain decision-makers expressed an intention to increase supply chain visibility in the coming year, with many feeling their visibility is “awfully low.” 

The tools to utilizing data in your supply chain data are, inevitably, technological. And any company with a modern supply chain is a technology-dependent company. But not every company starts that way. Different organizations have different levels of tech fluency and needs.

At Expak Logistics, we recognize that no two companies are the same. We address supply chain visibility issues through our Expak Performance Suite (EPS), a technology platform that’s easily customized to meet customers’ unique and varying needs. 

EPS is comprised of both a complete Electronic Data Interchange (EDI) solution, ExpakConnect™, and its client-facing portal, ExpakShip™. 

ExpakConnect™ can manage every piece of data from your shipping partners electronically via Advance Shipping Notices (ASNs), Electronic Data Interchange (EDI), AS2, as well as proprietary B2B data interchange methods. Data transfers can be in real-time, sequenced, or processed as batch updates, pulling files from any system: Email, FTP, SFTP, API, VANs, etc. This allows us to manage both inbound and outbound integrations for your supply chain data with ease.

ExpakShip™ is a web-based tool that operates seamlessly from any browser or device. You can utilize it to create, label & track shipments, update shipment statuses, view customizable analytics, manage invoices, and more. It provides settlement capabilities for drivers, carriers, and customers, handling the settlement tasks where the data sits or exported to any accounting system. ExpakShip can integrate into any existing infrastructure, or you can run in our cloud deployments that reduce the need for any infrastructure or technology requirements. 

We are continually improving our technology based on three core principles: Effective Communication, Business Intelligence, and System Innovation. Harmonizing data and automation will drive exponential growth from sustainable ways of transportation to fast deliveries. By continuously pursuing automation and seamless integrations reduce time, increases efficiency, and, most of all, lowers costs.

Determining if Split Inventory is Right for You

Storing your inventory in multiple locations, across the nation, could have enormous benefits for your business. 

What is Distributed Inventory?

Distributed inventory helps keep products closer to your customers. Instead of a single fulfillment location, multiple locations help orders get to their end destination faster and can result in cost savings. 

Thanks to Amazon Prime, today’s customers expect deliveries to happen faster than ever. Two day or less is increasingly the norm. Having a faster delivery time than your competitor can give your company an advantage in driving sales and building customer loyalty. Fulfillment is at the heart of the customer experience, and speed-of-delivery is a big part of that experience.

 

Factors You Need to Consider

 

Analyze Your Existing Customers 

The first step is to analyze your order history to spot where most of your sales are generated.  Many eCommerce stores are not locally targeted; products that are not tied to a particular region are great candidates for inventory splitting.

 

Inventory Management Capabilities

Let your current fulfillment partner know you are thinking about splitting inventory, to see if that is a capability they have. Request software demos to ensure the system meets their needs. Find a provider with customizable software rather than an “off the shelf” system that may not be compatible with your business goals and logistical challenges. Analyze the methods your 3PL uses to manage inventory across multiple locations.


Potential Cost Savings 

How far your shipment travels is a crucial factor in your shipping costs. Inventory that is closer to the customer can be fulfilled via road instead of air, saving you money.  Shipping costs can also quickly add up for heavier items like furniture, auto parts, books and more. The heavier your product is, the higher your potential cost savings when your package has to travel less in the final stages of customer delivery. However, you will want to do a cost analysis to ensure the increased storage costs do not offset the savings in shipping fees.

 

Lower Risks

Natural disasters and catastrophes can prevent shipping carriers from making it to the fulfillment center or cause delays while in transit. Floods, wildfires, hurricanes, snowstorms, or other forces of nature will likely impact some of your orders at some point in time. By splitting your inventory across geographic regions, you will have backup inventory in other locations to prevent delays or lost stock. 

 

Should you split your inventory?


As your business grows, so do your needs, making it an important question to ask your logistics team periodically. By tracking shipping costs and sales volume by geographic location, you will have the ability to decide what is best for your company. Splitting your inventory can save you money and ensure you can meet consumers’ expectations for quick delivery, ensuring everyone is happy. 

 

 

 

 

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