What do you mean too heavy, too wide, too unreliable, and not smart enough? That may be the criticism that some people give to certain pallets. And when it comes to pallet selection, pallet users are definitely not equal opportunity employers. And logistics just may be the new battlefield for customers.
Logistics trends continue to influence selection such as efforts to provide lighter weight pallets. But there are other ways to skin a cat, and pallet service providers continue to come up with innovative ways to shave logistics costs. The biggest trends point to programs designed to increase on-time reliability, reduce miles and touches, or to tap into underutilized trucking miles. Having the right network, data and capabilities is key in these regards.
So what are some ways for pallets to compete for logistics advantage? The following are some areas to consider as you evaluate your pallet program.
By Keeping a Low Profile
In terms of logistics, a low profile can be a strategic advantage. The “L” word (aka ‘logistics’) has been a source of both hope and frustration for pallet decision makers over the decades. Back in World War II, the challenge of moving goods efficiently from the United States to the farthest reaches of the Pacific was a strong incentive to embrace the use of pallets, and military demand essentially created the pallet industry.
On the East Coast, however, pallets were initially met with resistance for wartime supply shipments to Europe. Acceptance from the navy brass finally came when they were redesigned to a lower profile, which would take up less space in ship holds. Low profile translates into more available cube for product, which is one way to attack the logistics barrier. Pallets that are redesigned to maximize space in trailers and sea containers is one way to deal with logistics barriers.
By Offering Onsite Sortation
What happens if pallets can avoid a trip to a service center or a recycler location and be re-issued right from the receiver? The pendulum has swung somewhat on this one. Over the years, we have seen providers promote the advantages of a dock sweep or removal of unwanted empties from receivers, to the advantages of allowing an onsite service center. iGPS challenged that status quo several years ago by shipping right from the receiver to a new customer, with the assumption that there would be no damage to its plastic pallets. For wood pallets, we increasingly see on-site sorting or total pallet management programs that eliminate the haul to the depot and make pallets available immediately for reuse onsite or for shipment to other customers. For pallet users, it can translate into convenience and a revenue opportunity. Fewer touches and fewer miles translates into value.
By Finding Underutilized Transport Capacity
When it comes to repositioning empty pallets, finding low cost freight opportunities has proven useful in cutting costs as well as in creating opportunities to move pallets to where they command a higher price. Long practiced informally, we increasingly see transportation management technology coming into play in this regard. How about new the transportation offering from CHEP’s Solutions Portfolio? This service enables an overlay of CHEP’s extensive backhaul network with pallet user transportation networks to identify and utilize trailers that would otherwise be running empty. The result should be cheaper pallet movements for CHEP and revenue opportunities for participants. Now, the white-wood industry needs to develop something similar with its customer base.
By Reducing Empty Pallet Backhaul Requirements
Wood pallet tactics in avoiding pallet backhauls include onsite services or utilizing emptied inbound pallets for internal use of outbound shipping. In the alternative material segment, companies have embraced tactics such as switching to nestable pallets. We see nestable pallets in terms of presswood pallets and plastic pallets. Pagen, a major Swedish baked goods manufacturer, reduced its empty pallet backhaul requirements by 40% after switching to a plastic nestable pallet. Then there is the more radical IKEA approach to eliminating empty pallet backhauls by eliminating the pallets themselves. Baling empty pallets is a viable solution if you are using paper pallets.
By Being More Reliable
Risk mitigation is a significant challenge in logistics, and reliability is critical in terms of a range of issues, including on-time availability and quality assurance. To the extent that pallet suppliers and their pallets are reliable, this can help ensure on-time shipments and elimination of quality defects related to shipping. Even for international shipments, the ISPM-15 program is highly reliable in ensuring seamless acceptance of pallets at ports of entry. But if there are snafus at some point even using export certified wood pallets can give some customers pause to consider other options.
By Fitting the Need (and the Doorway)
Last mile logistics, increasingly a discipline in its own right because of higher costs and strategic implications, has caused a renaissance of smaller footprint pallets for front door entry of retail convenience stores as well as in navigating tight aisles, where they allow drivers to get in and get out of locations more quickly, eliminating valuable time at each stop on their route. Another factor in last mile logistics is the display pallet. Smaller, floor ready display pallets are another approach at cutting the cost out of the final mile – while boosting sales in the process.
By Not Tipping the Scales
Light pallets allow greater payload, at least in theory, or lighter truckloads, translating into lower carbon emissions according to some proponents. The light pallet is also advantageous for airfreight.
By Being Smarter Than the Other Pallets
Smart pallets have been part of the logistics conversation for over 15 years, but have yet to make their way to the main stage of supply chain acceptance. Smart pallets that could expedite the speed and accuracy of receiving, send product quality updates, location, etc., can all help logistics execution. But the potential has yet to be fully achieved because you have to establish systems to collect and manage the data. Is RFID coming to a pallet near you? Increasingly yes, one pallet control software company told me recently. Speaking predominantly from the manufacturing and automotive sector, his company is seeing more and more RFID applications in pallets and containers. But this is still a very small part of the overall pallet universe.
Pallets and logistics are really joined at the hip. Logistics influences pallet selection, and likewise pallet providers have been acting creatively to reduce the logistics costs associated with established pallet systems. What the future holds is uncertain. The only certainty is that pallets will be holding the freight.
