POOL DISTRIBUTION: The Forgotten Mode?

Shippers are giving pool distribution a second look thanks to today’s third-

generation TMS, which is more powerful, flexible, and sophisticated than prior

generation products.

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POOL DISTRIBUTION: The Forgotten Mode?

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Over the next few pages we’ll explore the

historical challenges associated with pool

distribution, explain how shippers of all sizes

can leverage this shipping strategy, and show

how one major manufacturer has successfully

combined a full-featured, modern TMS with an

effective pool distribution approach.

The Forgotten ModeDefined as the consolidation of freight going

into a region, and then using a local delivery

company to handle the final delivery, pool

distribution fulfills a need in an era where

shipments can be as small as a single package

or as large as a full truckload.

Somewhere in between those two endpoints

lies a gap that most shippers fill by using LTL

freight options. Once those LTL shipments reach

a certain level of volume and frequency, it makes

sense to explore other, more affordable options.

If you are moving freight between regions,

shipping a high volume of less-than-truckload

(LTL) shipments between regions, or looking

for ways to save money on longer freight

moves, then you’ve probably considered pool

distribution as a viable option.

Based on the perceived difficulties associated

with the shipping approach, you likely turned

to a different shipping strategy to fulfill your

needs. After all, pool distribution has historically

presented some stumbling blocks for shippers

looking to leverage this strategy.

If you’ve never considered pool distribution,

it’s time to give it a second look. Thanks

to full-featured, modern transportation

management systems (TMS), companies are

rethinking how they look at pool distribution

and reaping the rewards of this often-

misunderstood shipping tactic.

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“Fortunately, a good TMS will do all of this hard match on the fly and present results that allow the route planner to do his or her job more efficiently.”

—JP Wiggins, vice president of logistics

The Technology Component With the rise of omni-channel and e-commerce,

shippers’ use of LTL is increasingly

exponentially. To get the most out of pool

distribution, shippers need to have at least some

volume of LTL freight being shipped regularly

between geographic regions. The longer the

moves and the more freight that’s involved, the

more sense it makes to look at pool distribution.

“The basic savings come from the fact that it’s

cheaper—and faster—for a shipper to move a

full TL of freight closer to it’s destination,” says

Wiggins, “than having it shipped via carrier’s

LTL network.”

The cost savings associated with a fine-tuned,

optimized pool distribution strategy can be

substantial. Wiggins estimates that pool

distribution supported by a full-fledged, modern

TMS can help a company save at least 10%

in annual freight costs. “Each shipment has

different pool points, cross-dock times, cross-

dock fees, and local delivery fees,” he points

out. “Fortunately, a good TMS will do all of

this hard match on the fly and present results

that allow the route planner to do his or her job

more efficiently.”

As an added bonus, pool distribution is generally

faster than LTL direct, which must rely on

the carrier’s hub/spoke delivery system. “It’s

generally faster to load a shipment on a truck

and drive the long distance with TL, and then

use pool distribution to cover the remaining

distance,” Wiggins says, adding that most LTL

carrier terminals accept TL “drops” and are

willing to serve as pool points. Once those

willing carriers are identified, negotiating

rates for pools and regional carriers is pretty

straightforward.

That’s where pool distribution enters the picture.

Take, for example, the company that needs to

move a group of LTL shipments from Chicago to

various southeastern destination points. Instead

of using LTL, it could put those shipments on a

truckload (TL) and then have that vehicle drop

shipments off in hub cities like

Memphis and Atlanta. From there,

the “pool” based in each of those

hubs would make their respective

deliveries throughout the region.

Up until recently, managing pool

distribution was a task that many

shippers were unwilling to take

on, and their technology systems

weren’t much help either. Some

shippers use static routing charts, while others

rely on their third-party logistics providers (3PLs)

for the technology component. And while many

of the Tier 1 TMS platforms support this type

of freight consolidation, for example, those

systems are also very complex and difficult to

implement and maintain. Many older systems

also struggle with dynamic planning, where

orders changes constantly happen and dealing

with real-time execution requirements.

“For past-generation systems, the TMS vendors’

engineers were heavily involved in setting and

tuning the transportation optimization needed

to fully leverage pool distribution,” says JP

Wiggins, vice president of logistics at 3Gtms.

“The problem is that shippers’ businesses

change more frequently now, and an ‘untuned’

TMS leads to a loss in savings associated with

this shipping strategy.”

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“Pool distribution is an option that all shippers

moving to LTL shipments inter-regionally should

evaluate,” says Wiggins. “Not only are the cost

savings and service benefits of pool distribution

plentiful, but when you add a modern TMS to

the equation—to handle the routing optimization

and execution—the average 10% freight savings

becomes even more attractive for a wide range

of companies.”

Pool Distribution in Action: Bemis ManufacturingAs a family-owned business that traces its

roots back to 1901, Bemis Manufacturing

Company has quietly grown into an innovative,

international company that serves customers

around the world.

“Most regional carriers are hungry for pool

freight because it allows shipments to enter

their networks that they wouldn’t normally

be handling. In fact, Wiggins says the first

optimization engines were developed back in

the 1980s for regional LTL carriers specifically

for this purpose.

And, aside from LTL carriers, there are also

numerous “special purpose” cross-dock

facilities in every region. Combine these

opportunities with the obvious advantages that

pool distribution presents, says Wiggins, and

the strategy becomes that much more enticing

for shippers.

KDelivery

I Delivery

B

Delivery

Pool Distribution Example

Poolpoint

PoolpointA

Delivery

H Delivery

G Delivery

F Delivery

C

Delivery

D

Delivery

E

Delivery

JDelivery

Pickup

Route 1: I Route 2: A, B, C, D, E, F, G, H Route 3: J, K

Linehaul (TL)

Sub-trip (LTL or parcel)

Direct TL

Multi-stop TL

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“3Gtms’ combination of many quality options with a uniquely powerful optimization engine saves us a lot of money and doesn’t take any more time.”

—Keith Bassuener, manager of

distribution and logistics

For Bemis, the TMS factors in fuel charges,

stop-off charges, bridge charges, and other

fees to develop an effective pool distribution

plan for any given shipment. The system also

factors in the rates, carrier capacities, service

and drive times, appointment hours, equipment

requirements, and other key points.

Armed with a full-featured TMS, Bemis can

now expend less manpower on manual tasks

while also providing a higher level of customer

service. “Our TMS figures out where everything

intersects and then comes up with the best

daily freight plan,” says Bassuener. “Aside from

monitoring any exceptions, my team can focus

on signing up and monitoring the most effective

carrier selections for our transportation network.”

Bassuener says Bemis is also benefitting from

its TMS’ optimization capabilities. “3Gtms’

combination of many quality options with a

uniquely powerful optimization engine saves us

a lot of money,” adds Bassuener, “and doesn’t

take any more time. We’ve created a great set

of transportation options to move our freight,

including LTL and TL carriers along with many

overlapping pool points.”

TMS + Pooling = Success There was a time when the cost of installing

and implementing a full-featured TMS was too

high for the typical mid-sized company to even

consider. As we’ve covered in these pages, the

environment has changed dramatically over the

last few years.

Today, companies of all sizes can tap into the

power of a TMS without having to break their

budgets, tie up IT resources, spend years in the

implementation phase, or even maintain the

systems over the long haul.

Based in Sheboygan Falls, Wis., the company is

best known for its toilet seat products, but it also

makes, commercial, and indoor furniture, suction

canisters, sharps containers, fluid management

systems, gas caps, gauges, and various contracted

injection molded plastic parts.

Previously using an off-the-shelf

TMS to manage its freight pooling,

Bemis needed a more automated

approach that would manage

tasks like freight routing—which it

handled manually.

“We knew that we were leaving

money on the table by not being

able to run through all of the

available shipping options—

including multiple locations, multiple carriers,

LTL vs. TL vs. parcel direct, or hundredweight

programs,” says Keith Bassuener, manager of

distribution and logistics. “There were a lot of

variations and calculations to be managed for any

one plan during any given day.”

To better manage its end-to-end, global

transportation network, Bemis implemented the

3G-TM TMS in early-2016. And because Bemis’

mix of freight changes dramatically from day

to day, it needed an optimization platform that

could easily and quickly choose among all of

these options and find the most cost-efficient

way to move its freight. In many cases, that

option was pool distribution.

“Bemis has been using TMS solutions for over 20

years, and 3G-TM was the first modern TMS we

found that allowed us to manage our pool points

and multi-stop TL planning,” says Bassuener. “We

evaluated many different systems, but those few

that had true pool distribution functionality were

too complex to set up and maintain.”

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Companies like Bemis, for example, have

found themselves operating in an increasingly

global transportation framework that’s virtually

impossible to manage using just spreadsheets and

phone calls.

“When you start using pool distribution, there

are suddenly a lot more moving parts to deal

with,” says Wiggins. “To get your arms around

the number of shipments that need to go out

during a certain week, the best freight options for

those orders, and the best execution strategies,

companies need a TMS that offers complex

optimization tools and capabilities.”

On average, firms that implement TMS are not

only seeing a double-digit reduction in annual

transportation costs, but they’re also achieving

efficiencies that simply can’t be attained using an

Excel-based transportation management approach.

“Historically, return on investment for TMS that

supports pool distribution was skewed because the

systems were too expensive and took too much

time to install and implement,” says Wiggins. “The

vendor community has stepped up to the plate and

made it much easier for any size company to realize

the value of a full-featured TMS.”

About 3Gtms3Gtms is the fastest growing, Tier-1 transportation

management system (TMS) provider. It is dedicated

to helping shippers and logistics service providers

gain a competitive advantage through technology.

Whether you move $10 million or $1 billion in

freight, 3G-TM solution seamlessly manages the

full transportation lifecycle, including transportation

planning and optimization, execution and settlement,

empowering customers to make better shipping

decisions while meeting their service goals. 3Gtms

is dedicated to delighting its customers and as a

result, holds a 100% customer satisfaction rate that

is unmatched in the industry. For more information,

visit: www.3gtms.com.

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