Compared to a traditional DC network or an LTL model, Pool Point Distribution offers shippers a flexible, efficient and cost-effective distribution solution.
Here is a snapshot of the advantages of Pool Point Distribution:
- Linehaul costs are reduced by “fluid loading” (floor-loaded) shipments to pool points where they are processed and routed locally; thus, improving route density. Fluid floor-loaded trailers can increase cube/utilization more than 50% depending on freight mix and current routing limitations.
- Benefits Large LTL Shippers that need dedicated type service– A pool point model works best for shippers that have high service needs, but shipment sizes that may not work in a traditional LTL, dedicated or private fleet environment.
- Applied technology maximizes loads, monitors all freight in real time, provides for dynamic routing, and provides web monitoring for all facets of the operation.
- Driver layovers and excess miles are no longer necessary by eliminating round trip routes to final delivery or pickup points; thus, also eliminating the need for sleeper tractors and the expense of driver layovers). Shorter routes may be run from a pool point to final delivery points, and one-way carriers may be deployed from the DC to the pool point.
- Real estate savings may be realized by the need for less DC space.
- Potential to combine other shipper volumes to build better route density and reduce costs.
- Merge in Transit – Pool Points provide the ability to combine and deliver product from multiple buyers.
- Bypass the DC and ship directly to pool points, reducing DC handling and inbound freight costs.
- Utilizing 3PL warehouse space allows the shipper to be more flexible and mobile as the business changes.
Now let’s examine each advantage:
- Reduced linehaul costs – In a typical DC network that services multi-stop routes, there exists a need for round-trip routing to service outbound stops and inbound pickups along with potential to use one-way carriers for multi-stops. With a pool point set up as a forward deployment point, more round-trip routes may be run which provides better service than one-way carrier options, keeps empty miles down and deploys one-way carriers for line hauls.
- Benefits LTL shippers – By combining LTL shipments into a common pool point, shipment times, LTL costs and subsequent damages may be reduced; thus, increasing customer service.
- Technology must integrate this operation in real time. Beginning with routing of inbound and outbound stops, technology tracks all SKUs through scanning and all trucks through GPS, monitors all routes in real time via the web, provides exception reporting and offers a digital Proof of Delivery. Technology must serve as the conductor of this symphony.
- Driver layovers are reduced by putting more pool points closer to the areas of activity so that a one-way carrier (or dedicated/private fleet if there are returns or inbounds) may deliver the freight into the pool point. Local drivers then execute routes from the pool point.
- Freight that is floor-loaded instead of palletized will provide for a much higher cube. More freight = less loads = less miles = less cost. Scanning technology insures the right SKUs are delivered to the right places. Trailers without pallets eliminate the need to keep a clearance level for forklift masts and allow more room for freight.
- The nature of a pool point center is a small, highly-efficient space where loads arrive, are unloaded, sorted for the final route, reloaded and dispatched. A much smaller footprint is necessary over a traditional DC or warehouse.
- If using a shared pool point model, your freight can be co-mingled with multiple shipper freight; thus, increasing density further. Good Loss Prevention practices will insure reduced risks as there is more exposure to loss and damage in this model.
- Bypass the DC and ship directly from your inbound points to your final location through a pool point. It is essential that network design upfront is comprehensive in its review of your inbound and outbound network, and that updates to your model are constantly made as your mix changes. In many cases, vendors are located closer to the pool point which decreases lead times and IB freight costs.
- Utilizing 3PL warehouses reduces capital costs and builds on an already shared network.
Challenges to Pool Points
Pool points also bring some unique challenges:
- Chain of Custody/LP concerns – Especially if you are participating in a “shared” network pool point (as opposed to a dedicated model), there may be Loss Prevention and Chain of Custody risks your company is not willing to take. Co-mingling equates to more chances that something may be lost or stolen. Do your homework up front and understand the risks.
- Increased handling – Because freight is being floor-loaded and handled more, there is a risk of freight damage. Be sure your freight is a good fit for Pool Point Distribution.
- The right length of haul, volumes and frequency are important to find savings – Not every network is a fit for a pool point. Explore the option, and understand if it will work in your current situation.
Whether you are a company well-versed in pool points, or one that has never considered it, does it makes sense for you? What questions would you ask to evaluate if it is a fit for your business or not?
– Tim Voulopos, SVP Business Development