Are Your Pallets Carrying Too Much Cost?

Look at your end-to-end supply chain for cost-saving pallet solutions.


Every company today is looking for mere pennies to squeeze out of their supply chains, especially when it comes to using and managing pallets.

“Whether it’s a result of the recession or of the increasing concerns over rising fuel costs, everyone wants to save pennies—opposed to the days when the aim was to save nickels and dimes,” says Mike Hachtman, senior vice president of sales and business development for Houston-based IFCO Systems. “The days of buying a pallet and loading it with product to be shipped out doesn’t work anymore. You really need to look at your complete supply chain to determine the best and most cost-effective application for your company.”

Pallet providers today are being asked by their customers to help them find holistic solutions that will help contain costs while still providing a high level of customer service. Here are some suggestions from the experts.

 

Take A Holistic Approach

Pallets had long being marginalized and perceived simply as commodities. In reality, high-quality pallets are exceptionally engineered and designed products. They perform as integral components of the supply chain, and are not simply a method of conveyance from one point to another.

“Those who handle pallets must be trained to understand that reusable packaging, such as pallets and containers, are valuable assets,” notes Steve Harrison, national sales director for Los Angeles-based Rehrig Pacific Co. “Pallets—and especially plastic pallets—are capitalized over several years and they go onto your books as capital assets. But many times they are perceived as expendable items and not as true assets, which can lead to misuse and needless supply chain costs.”

Many people take pallets for granted, notes Chaille Brindley, publisher of Pallet Enterprise in Ashland, VA. “If you are thinking of reengineering your product line, you must consider how that will affect other parts of your supply chain—including your pallets—so you don’t encounter load failure,” he says, referring to a case involving a warehouse worker who was killed because a bottled water company had redesigned its bottle packaging without considering the affect that would have on the overall unit load.

Members of the National Wooden Pallet and Container Association (NWPCA) understand the critical role pallets play in the supply chain, says Bruce Scholnick, president and CEO of the Alexandria, VA-based organization. “People who join our organization recognize they are in a real supply chain business. As such, our job is to engineer the most effective pallet design to serve the specific requirements of our customers.”

CHEP has identified several areas along the supply chain that affect system-wide impacts, notes Derek Hannum, director of marketing for CHEP USA in Orlando, FL. “Our Supply Chain Services is an independent team of supply chain experts from a variety of fields including transportation, equipment, logistics, and planning. They are not linked to our commercial organization, so they offer an unprejudiced and unbiased approach to helping customers understand the system-wide impact of the pallets they are considering.”

Procurement departments typically look at the raw costs, with no sensitivity to an end-to-end look as savings, notes Bob Moore, CEO and chairman of iGPS in Orlando, FL. “One of the things I have noticed in difficult economies such as the current one is that many CEOs are charged with getting the lowest price possible, and people shoot off the decision to acquire pallets to procurement. But cheaper does not necessarily mean the best. I encourage companies to get the end-of-the-day cost to use pallet—and not just the price to get the pallet. If a cheaper pallet ends up costing me more to use it, then it isn’t the most cost-effective pallet. So I think the economy took us down a different road as companies stopped looking at the holistic cost.”

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