Continuous Pool Optimization – Putting Creativity to Work in Transportation Transcription
Hello everyone, and welcome to Talking Logistics, where we have conversations with thought leaders and newsmakers in the supply chain logistics industry. It’s my great pleasure to welcome Mitch Wellesley, CEO and founder of 3G TMS, to the program. Today, we’re going to talk about continuous pool optimization, a concept that puts creativity to work in transportation.
As we all know, the transportation market is dynamic and cyclical, with new challenges and complexities constantly emerging. That’s why creativity and innovation are ongoing necessities in this industry, especially when it comes to transportation management systems. Today’s episode will focus on continuous pool optimization, which is a great example of how creativity can be applied to solve transportation problems. Mitch is here to share his insights and advice on this topic, as well as the broader role of transportation management systems in today’s changing market.
Mitch, welcome to the program.
Mitch: Thanks, Adrienne. It’s great to be here. I appreciate the opportunity to talk.
Host: Great. Before we dive into the specifics of continuous pool optimization, let’s start by talking about the role of transportation management systems (TMS) today. You’ve been in the industry for a long time, practically since the beginning of TMS. I’ve been following the market for over 19 years. From your perspective, what has changed the most with TMS over the years, and what has remained fundamentally the same?
Mitch: Fundamentally, the concept of a TMS—what it’s supposed to do—hasn’t changed much. It’s still about taking a bunch of orders, using algorithms to figure out how to move them efficiently, executing the shipments, and settling the freight bills. However, the details around that have changed dramatically.
Since the mid-1980s, we’ve seen improvements in computing power, which allows us to use more accurate information. We’ve also increased connectivity, enabling us to do much more with execution, such as tendering and status tracking, as well as freight settlement. For example, back in the 80s, the fact that a TMS could print a bill of lading was a huge deal. Today, it’s about saving time with execution and using TMS to manage by exception, saving money through better audits, and increasing efficiency throughout the process.
Host: Right. Technology has certainly evolved with the rise of cloud computing, mobile applications, and the Internet of Things. These advances have enabled TMS to handle more complex problems in a much more efficient way. But transportation itself has also changed, with the rise of e-commerce, parcel delivery, and new customer demands.
Let’s now dive into the topic at hand—continuous pool optimization. You’ve mentioned it already, but let’s start by defining it. What exactly is continuous pool optimization?
Mitch: Continuous pool optimization is an approach to handling freight that goes beyond traditional pool distribution. Traditionally, pool distribution meant taking freight to a carrier’s terminal, where it would be consolidated into LTL (less-than-truckload) shipments. But with continuous pool optimization, we’re dealing with more uncertainty. For example, you might not know how long freight will sit at a distribution center, or how it will be moved afterward. You don’t know if it will leave as a truckload, multi-stop truckload, or a larger LTL shipment.
The challenge is that we don’t have all the information up front. There might be orders originating in another part of the country that haven’t even been cut yet. This makes it difficult to optimize everything in one go. The key to continuous pool optimization is figuring out the best way to move freight while dealing with this uncertainty.
Host: That sounds complex. Can you give us some examples of how continuous pool optimization works in practice?
Mitch: Sure. One common example is a 3PL (third-party logistics provider) with a warehouse in a place like Atlanta. They might collect freight from multiple small and mid-size customers around Atlanta, bring it to their central facility, and then optimize how to move it from there. They could run a multi-stop load directly or consolidate it into LTL shipments.
Another example could be a company distributing freight across the U.S. from a central warehouse. They have to decide whether to drop freight at a distribution center or take it directly to the destination. These decisions are influenced by a variety of factors, including time, cost, and available capacity.
Host: It sounds like continuous pool optimization is all about being flexible and adapting to changing circumstances. The TMS has to be smart enough to consider new options as they arise, right?
Mitch: Exactly. The key is that continuous pool optimization allows you to make adjustments as new information becomes available. For example, you might start with a plan based on what you know on day one, but by day three, other options might have opened up. You can rerun the optimization with the new data to further fine-tune your decisions.
Host: That makes sense. You mentioned earlier that technology plays a big role in making continuous pool optimization possible. What innovations or capabilities in TMS should users look for to enable this?
Mitch: The most important innovation is the flexibility of the TMS to handle new constraints and options. In the past, TMS systems were more rigid, but today, a good TMS needs to evaluate all possible scenarios in real time. This requires algorithms that can handle uncertainty and adapt to changing conditions.
Another key capability is the ability to integrate with other systems and data sources. This allows the TMS to get real-time updates on shipments, inventory levels, and other critical factors that influence optimization decisions.
Host: That’s really insightful. You’ve touched on the fact that continuous pool optimization allows companies to save money and improve service by offering more options. Can you give us a sense of the types of benefits companies are seeing?
Mitch: The main benefit is more flexibility, which leads to cost savings. Companies can make smarter decisions about whether to consolidate shipments, use multi-stop loads, or bypass a distribution center altogether. This flexibility helps companies lower transportation costs, improve efficiency, and better meet customer expectations.
Another benefit is that companies can use continuous pool optimization to handle more complex business needs. For example, they can marry stock at a warehouse with incoming freight to make more informed decisions about how to move goods.
Host: It seems like continuous pool optimization is all about being creative and finding new ways to solve transportation challenges. What do you think are the emerging challenges in the industry that will continue to drive innovation and creativity?
Mitch: The industry is constantly changing, and new challenges will always emerge. The key is for people to think creatively and ask, “What if?” When people bring new challenges to us, it drives innovation. Technologically, the more information we can gather and the faster we can process it, the more options we can create. The flexibility to consider all these options is what makes continuous pool optimization so powerful.
Host: I love that perspective—simplicity is the enemy, flexibility is your friend. It’s all about questioning the status quo and exploring new options. Well, Mitch, we’re running out of time, but you’ve given us some great insights into continuous pool optimization and how creativity is shaping the future of transportation. Thank you for joining us today.
Mitch: Thank you, Adrienne. It’s been great talking with you.
Host: And thank you to our audience for tuning in. If you’re watching this episode on demand and have a question or comment for Mitch, feel free to post it, and I am sure he’ll be happy to respond. Thanks again for joining us, and we look forward to seeing you in future episodes of Talking Logistics. Have a great day!
