As the supply chain evolves, the world of conventional pallet and container management gets tougher
and tougher.
The old economy, with long serving supply chain partners and even longer serving employees, provided a stable environment. Staff, once trained, could be counted on to make the right decisions about pallet management on the dock or out on the road. Paper forms, manual or computer ledgers, pallet control software and the like could help keep a program on track.
But now things are different. Supply chain links are more transitory. Partners change. Employees and technology change. Corporate mergers are part of our day. I have had four different employers the past decade although I still work at the same desk.
The supply chain of today is ‘mix and match’ with third-party providers popping in and out of the picture. Likewise, labor is in a similar mode of accelerated turnover. In the old economy, I worked at a warehouse where staff needed 8-10 years of experience before they had enough seniority to work on my receiving dock and make important pallet
decisions.
I recently visited a third-party facility that relies on a steady stream of new staff. While I was there, some new temps were assigned to receiving. They likely will be gone in a few days or a few months. This is in no way a criticism of that site; it is just a fact of life in the new economy.
If we are going to have returnable pallet programs that rely on an ongoing smorgasbord of new partners and new employees, we need solutions that are relatively straight forward. This has been part of the attraction for pallet rental programs such as CHEP.
Other groups, meanwhile, have been looking at radio frequency identification (RFID) technology as a possible solution for better tracking. Earlier this year I wrote about Trenstar, the container pooling company that is utilizing RFID to track containers, albeit more expensive ones. (Pallets were not expensive enough to fit the Trenstar business model). It just did not seem plausible to Trenstar management that employees using manual tracking methods could accurately and consistently keep track of expensive mobile assets using manual recording methods. Their solution: RFID.
Then there is the automotive industry. With an annual replacement cost of over $750 million for reusable racks and totes, according to a research firm, you better believe the automotive industry is interested in better management of mobile assets. It is looking at RFID, too.
Recently I interviewed Morris Brown of the Automotive Industry Action Group (AIAG) about its interest in the RFID tracking of pallets and containers. Morris, AIAG’s program manager for material management, noted that with such a big replacement cost the industry is motivated to find a solution.
The thing is this. AIAG likes the idea of RFID tracking because containers have a nasty habit of getting lost. However, so many ideal conditions are required to do it perfectly, according to Morris. For example, barcode labels can get ‘beat up’ due to rubbing together in transit, making them difficult to read. Then there is the challenge of the human factor — such as staff turnover and training issues.
Morris believes the cost of RFID is still too high to use for tracking auto industry returnables, but his group wants to be ready when it drops low enough to be attractive. With this in mind, AIAG is in the process of setting up a limited field trial.
Note: Two makers of RFID tags recently announced price cuts to 12.9 cents and 7.9 cents. Although the prices are still above the 5 cents that some industry analysts have said is the level needed to ensure a viable RFID industry, the move nevertheless could hasten adoption of the technology.
With the accelerated rate of change in industry, the old world of pallet control is increasingly under pressure. As the cost of RFID drops, it may offer new opportunities for pallet users to keep better control of their reusable pallet systems.
