Specialty Retail’s Best Kept Secret: Pool Distribution

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Specialty Retail’s Best Kept Secret: Pool Distribution

By Jeffrey Berichon - 12/08/2016
Pool distribution has been around for 30 years; however, it looks as different now as today’s styles do from the 80s, when it meant using a pool point within an LTL or private transportation network. It’s now a unique model where retailers share a common distribution network of logistics services providers (e.g., Dicom Transportation Group with a national footprint, Freight Systems in the Pacific Northwest/West Coast) that use common technology to manage the flow of goods from DCs or suppliers to a store’s back room. With decreasing margins and the need to move goods quickly, pool delivers the higher speed of parcel at the lower cost of LTL.
 
Pool is a great example of the power of the “network effect” because it leverages numerous retailers and pool operators to substantially lower distribution costs and increase delivery frequency. Delivery density and frequency drive the savings and better service. For example, rather than five retailers having five separate LTL or parcel deliveries to a mall on one day, those five retailers share a single delivery where the five stores get serviced as one stop. Stores are replenished more often because the volume of goods moving through a dedicated transportation network is higher.
 
Pool’s benefits extend beyond faster and lower-cost store replenishment:

Large transportation savings. The shift from parcel to pool and private/dedicated fleets offers big savings by eliminating the costs associated with an in-house fleet.
Precision tracking. Highly granular tracking of comingled freight provides complete visibility for retailer and pool operator. Advanced shipment notices (ASN) detail, at the carton level, exactly what goods to expect at a pool point, and all cartons are scanned at each touchpoint (i.e., pool receipt, staging, loading, store receipt).
Minimal product losses and claims. Technology flags exceptions (e.g., missing or wrong carton) so retailers can reconcile issues as they happen, which minimizes product losses and claims - a benefit for retailers and pool operators.
Optimal inventory management. With complete visibility into where goods are and an understanding of replenishment lead times, retailers minimize both overstocking and out-of-stocks.
Ability to “meter” inventory. Fast moving SKUs, peak season and/or promotional inventory and non-merchandise can all be staged at the pool operator for delivery later. With this “trap and hold” approach, pool operators cater to retailer requirements, and retailers overcome the constraints of small store backrooms.   
Reduced store labor: Defined delivery schedules, tighter delivery windows (e.g., two hour) and predictable levels of on time performance help retailers better manage store labor and payroll.
 
Given the standardized processes and technologies in pool today, retailers can take advantage of an infrastructure that already exists to quickly convert some or all of their store replenishment operations to pool. Keep your store associates selling - and your pool operators shipping - so products arrive at the store quickly, on time and intact.  
  
Jeffrey Berichon is SVP of product management at Descartes.