In an era where consumer expectations are sky-high, retail businesses must seek out strategies that not only cut costs but also improve retail supply chain efficiency, which is a cornerstone of the retail experience.
Having the right merchandise consistently in stock is good for business. Stockouts, on the other hand, can result in not only lost revenue but ultimately lost customers. Retail supply chain management requires sound logistics strategies for keeping stores well stocked. One such strategy is the utilization of pool distribution. Potential benefits of pool distribution for retailers include cost savings, faster and more reliable delivery of merchandise, and even potentially lowering the retailer’s carbon footprint.
What is retail pool distribution?
Often compared to carpooling, pool distribution is a logistics model designed to optimize the shipment of goods to various destinations within a specific geographic region. It leans into the specialization offered by third-party logistics (3PL) vendors to streamline logistics and track shipments more accurately.
Pool distribution is an alternative to sending individual shipments directly from a centralized distribution center(s), whether via Less Than Truckload (LTL) shipments, Full Truck Load (FTL) shipments that make multiple stops and/or sending shipments via small parcel common carriers. Pool distribution consolidates these shipments into a single, long-haul truckload, which is then transported to a regional terminal or cross-dock facility.
Unlike LTL shipping, which co-mingles loads from multiple shipping sources and can often lead to significant unpredictability throughout the supply chain, pool distribution focuses on efficiently moving consolidated freight to endpoint locations in a more controlled, predictable manner.
Pool distribution may consolidate goods from more than one shipper, but the principle of breaking down distribution into controlled, consistent, shorter steps remains the same. Doing so eliminates much of the complexity, reduces the risk of external disruption and some of the cost involved in relying on LTL shipping.
Once the long-haul pool distribution load arrives at the terminal or cross-dock, the consolidated shipment is broken down into individual orders, which are then loaded onto local delivery vehicles for their final journey to the respective retail stores.
This strategy is particularly beneficial for retail businesses, enabling them to streamline their supply chain, ensure timely deliveries, and potentially realize significant cost savings.
A cost-efficient retail logistics strategy
Pool distribution can be a boon for cost-conscious retail businesses. By consolidating various shipments into one, and utilizing cross-docking, retailers can significantly cut down on the overhead costs associated with managing multiple distribution centers and an expansive long-haul fleet and associated personnel and related overheads.
The cost-effectiveness of pool distribution is especially noticeable when compared to traditional LTL shipping models which often involve higher transportation costs due to the multiple stops and handling points required to move goods from multiple shippers simultaneously and can be challenged, to say the least, to hit consistent delivery windows.
A way to accelerate the retail supply chain
In the retail sector, timely store replenishment is critical. Pool distribution accelerates the supply chain by moving products swiftly from distribution centers to retail shelves, eliminating the additional stops required by LTL and FTL shipping—time which quickly adds up, creating costs and slowing down the arrival of merchandise you’d rather be selling than shipping. Pool distribution’s streamlined transit times ensure that products are available to meet consumer demand promptly, thereby improving customer satisfaction and limiting lost sales.
A route to more manageable retail deliveries
Pool distribution facilitates more reliable and less disruptive deliveries. Unlike the traditional LTL model with its many stops—which can cause a domino effect of delays—pool distribution offers more visibility into the supply chain with controlled steps leading to more predictable delivery schedules and tighter delivery windows. For retailers, this means staff spend less time on call for arriving merchandise and less in-store disruption from attending to customers and generating the most positive in-store experience.
A strategy that minimizes damage to merchandise
The less handling the better, especially when it comes to reducing the risk of damaged goods, which cut into your margins. Time spent at distribution centers, LTL loads being constantly rearranged at every transit stop along the way increase the chance of freight being damaged. Pool distribution minimizes the number of times goods are touched during transit. Through continuous cross-docking processes, your merchandise is transferred directly from long-haul to local delivery vehicles, reducing the chances of damage significantly.
An opportunity to embrace environmental responsibility
According to the World Business Council, the retail supply chain is responsible for 25% of global greenhouse emissions. Meanwhile, consumer expectations around sustainability are shifting. The majority of consumers across all age groups expect brands and retailers to become more sustainable. Pool distribution is a step in the right direction—it reduces carbon emissions by optimizing transportation routes and consolidating shipments. This eco-friendly approach aligns with modern consumer values and helps retailers meet sustainability goals.
Picking a 3PL pool partner
As we’ve previously highlighted on the Expak blog, a successful pool distribution strategy starts with the right 3PL partner. From assessing your pool distribution needs to managing the logistical balancing act required to create and run consistent, cost-effective pool routes, expertise counts.
Consider a case where at Expak, we’ve equipped a discount retail chain with better technology, more efficient pool distribution opportunities, and more proactive customer support. These tailored solutions have not only streamlined their supply chain but also enhanced visibility into goods in transit at any given time, and provide them with a partner who is ready to quickly address issues that come up, so they can focus on their core business, running profitable retail.
Is pool distribution right for you?
Whether pool distribution is a viable solution for your business depends on a number of factors, including the volume and frequency of goods being shipped, and the geographical area being served. Initial calculations will have to be made regarding the suitability of pool distribution as the solution to your shipping needs. If it’s a fit, pool distribution can be a game changer in today’s challenging retail environment, getting goods to store faster and cutting overheads at a time when every dollar counts.
Want to know if pool distribution makes sense for your retail business? Contact Expak.