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Pros of Pooled Distribution

Posted by Kristen Melendez on Tue, Nov 26, 2013 @ 08:00 AM
Pros of pooled distribution

This year, there are six fewer days between Thanksgiving and Christmas—the peak time for shopping—and the sales you normally expect to make are condensed into a smaller period of time. Retail stores will be competing to capture every sale possible in a shorter selling season. Retailers will still want to keep their stock lean, but it’ll be trickier trying to maintain the correct inventory without being able to predict, exactly, when they’ll need certain product.

Say you stock inventory in order to meet the increased demand, but even these sell out. So begins the back-and-forth of ordering more, ordering too much, again and again. Instead, pooled distribution can reduce your shipping costs and will help you manage inventory so that you can be flexible during this year’s unusual shopping season.

Pooled Distribution Reduces Shipping Costs

By using pooled distribution to stock retail stores, you reduce the amount of costs that would come from having to ship directly from the manufacturers to each store or to ship from your distribution center by an LTL or parcel carrier. By having your inventory flow through a distribution hub close to your retail stores, you can quickly and cheaply deliver products on a dependable and consistent schedule. And if your product is being delivered on the same routes as other retailers nearby your combined volumes create economies of scale, saving on fuel costs and handling costs as well.

Better Planning and Customer Service

With pooled distribution, delivery dates and times are controlled completely by the retailer. This allows retailers to staff accordingly; this means inventory gets replenished on store shelves quickly. If an item that a customer wants isn’t on the shelves, customer service associates knows exactly when the store will be expecting more, meaning no guess work for the customer.

Closer Deliveries Mean Quicker Deliveries

Not only do you save on shipping and fuel costs with pooled distribution, but you also reduce shipping time. Neither you nor your consumers have the flexibility to wait for product to arrive. The holiday season is busy enough already, and now, with six fewer days, consumers will want to get to the store and purchase what they need right away. So it’s essential that you replenish your stores quickly and effectively. With pooled distribution you can do exactly, by saving time in transit with the elimination of multiple sort and transfer stops to get product to your stores faster.

Shopping Trends Vary Depending on Geography

Economic, social, and geographic differences between one location and the next can influence what products are purchased and how much product each stores sells.  For many retailers, not every store in their network will fit into a pooled distribution model, but by using a blend of parcel, LTL, and pool carriers there may be an opportunity to uncover efficiency gains in your distribution network.

 

The Costs of E-Commerce White Paper          Benefits of Outsourcing E-commerce Fulfillment and Returns Case Study

Topics: Store Fulfillment, Inventory Management, Pooled Distribution