Pool Distribution Making a Comeback with Manufacturers and Retailers

“If you think about it, for the past couple of decades in supply chain, companies have been focused on optimizing their network and maximizing efficiencies, on creating full truckloads and full order quantities,” said JP Wiggins, Co-Founder & Vice President of Logistics at 3Gtms, in a recent episode of Talking Logistics. “Today, with the Amazon effect and e-commerce, order cycles are a lot faster and order quantities are a lot smaller, which means a lot more less-than-truckload (LTL) shipments, and this is happening across a lot of different industries, not just in retail but manufacturing too.”

In short, a growing optimization problem today is responding to these more demanding customer requirements — smaller orders and shipment sizes, more frequent and reliable deliveries — in a cost-effective and efficient manner. And that’s why pool distribution is making a comeback today with manufacturers and retailers.

“If you have more than $3-5 million in LTL freight spend and you’re moving that freight across different regions in North America, then you’re a good candidate for pool distribution,” said Wiggins. “By line hauling the freight to a pool point, you get cost reductions and you also get improved service times because it’s faster.”

Wiggins also highlighted another benefit: improved visibility. “You can’t track LTL shipments very well. Once you put your freight into a carrier’s LTL network, they can’t really track where your freight is. But you can track line haul shipments much easier, know where a truck is by using GPS, ELDs, and other technologies.”

JP and I also talked about the role of transportation management systems (TMS) in enabling pool distribution, and he highlighted how today’s leading solutions take a more dynamic optimization approach to pool distribution. What does that mean? Watch the short clip below for JP’s explanation:

In short, instead of creating static business rules on when to use a pool point, taking a dynamic optimization approach means “you don’t have to [specify ahead of time] which pool point is going to be best on a given day,” said Wiggins. “Instead, you let the TMS dynamically figure out from a cost-efficiency standpoint which pool point is the best to use.”

I encourage you to watch the rest of my conversation with JP for additional insights and advice on this topic, including more examples of the benefits of pool distribution.

Is the Amazon effect leading to more LTL shipments for you? Are your customers ordering in smaller quantities and demanding more frequent and reliable shipments? How are you responding to these trends? Is pool distribution becoming more important in your operations? Post a comment and share your perspective!