Pool distribution consolidates multiple shipments at one point of origin, typically a distribution center. Pool distribution can reduce shippers’ transportation costs and facilitate a faster, more efficiency product journey.
What Is Pool Distribution?
When shippers need to send goods to numerous spots within the same region, they can use pool distribution to make the process more economical. This logistics model provides a more efficient way to distribute products.
How does Pool Distribution work?
How does pool distribution work? How does it reduce costs and improve efficiency? It uses:
- Centralization: A pooling point, such as a distribution center or warehouse, is used to collect goods from different suppliers in one place.
- Consolidation: At the pooling point, the goods are organized by final destination.
- Distribution: The company’s fleet or local carriers distribute the consolidated goods to their destinations.
- Flexibility: Shippers can adapt to demand and other fluctuations by changing pooling points and distribution routes.
10 Challenges of Pool Distribution
Pool freight distribution comes with an array of benefits. There are also challenges to consider. Shippers need to be aware of these challenges and manage them properly to gain the full benefits of this model.
Ten challenges include:
- Complexity: Shippers need to manage a network of numerous suppliers, as well as consolidation centers and carriers. It’s necessary to coordinate between the various stakeholders and between the different points of the process.
- Technology: Technology solutions help shippers track, route, and otherwise manage inventory within the pool distribution system. This requires implementing and managing the right technology. Without it, the job is much more complex and may be hard to scale.
- Space: Companies face the challenge of finding the right space and capacity to fit demand, which tends to fluctuate.
- Scalability: Businesses need to scale the pool distribution network to fit business growth. This involves keeping up with the same cost savings and efficiency that this model provides during the scaling process.
- Cost: Implementing the technology and infrastructure of this logistics model requires an investment. While this model helps companies save time and money, when it includes inefficiencies or isn’t managed properly, extra costs emerge.
- Partners: Companies need reliable partners to ensure the pool distribution process is consistent. Problems with partners throw off the process from working properly.
- Customers: It’s always important to consider customer satisfaction, which requires meeting delivery expectations.
- Visibility: Shippers may find it challenging to keep a clear view of the process, which includes having visibility of the various partners that play a role.
- Risk: Shippers need to manage various emerging risks in order to keep the model functioning properly. Some examples include added costs, delays from carriers, and disruptions to the supply chain.
- Regulation: Local and regional entities have regulations that shippers need to comply with. In addition, there may be industry standards to consider within the process of bringing products from pooling points to their final destinations.
Who Uses Pool Distribution?
Pool distribution is a helpful logistics model for various business types. It is commonly used in the following industry sectors:
- Manufacturers ship their products to a certain region, where they can then be distributed.
- Retailers optimize the process of replenishing inventory for stores in the same region.
- E-commerce companies improve last-mile delivery, especially during high volume times.
- Wholesalers and distributors optimize their delivery process.
- Logistics and transportation companies offer this model as a service.
- 3PLs and freight brokers consolidate shipments with this method.
- Companies in specific sectors, such as food and beverage, healthcare and pharmaceuticals, industrial, and automotive, can create a transportation network with faster, more effective delivery of goods.
Learn how to put your transportation data to better operational use
8 Pool Distribution Benefits
When the challenges of this freight distribution model are met effectively, companies experience many pool distribution benefits.
- Cost-Efficiency: A top benefit is transportation cost savings, which happens through shipment consolidation and route optimization.
- Accelerated Speeds: Delivery happens faster when the goods are shipped in bulk to a region and then delivered locally from there.
- Customer Satisfaction: When costs are down and delivery is fast and consistent, this formula tends to create more satisfaction from customers.
- Improved Processes: Pool distribution helps companies gain more visibility and control over distribution. It also creates more optimization of resources and improved inventory management.
- Increased Production: Shipping goods in bulk facilitates economies of scale for companies.
- Flexibility: Companies easily adapt their pooling points and routes as needed with this logistics model, which helps them with challenges like fluctuating demand or logistics problems.
- Eco-friendly Model: By shipping in bulk to a region before breaking down to local carriers, companies can use fewer trucks and cut travel distance. This method reduces a company’s carbon footprint, which is important in today’s world.
- Less Risk: This logistics model includes fewer transfer points, which cuts the risk of goods becoming damaged or lost.
How Does MercuryGate support Pool Distribution?
MercuryGate provides advanced technology needed to carry out pool distribution effectively, which includes addressing its challenges.
MercuryGate provides dynamic pooling that helps shippers carry out advanced scenarios and optimize routes.
Helpful features allow shippers to consider various transportation strategy options to choose the best one for each situation. For instance, it supports decisions about zone skipping and helps shippers decide when it makes more sense to fan into or fan out of a consolidation or distribution center.
Gain the Full Benefits of Pool Distribution
Pool distribution is a beneficial logistics model for shippers, especially when they utilize technology that supports it.
This logistics model helps companies move toward important goals, such as cutting transportation costs and delivering items faster.
Find out how you can put transportation data to work in other ways to improve your supply chain performance. Download our eBook to find out how.
