AIAG Pallet and Lid Survey Reveals Opportunity for Improvement

Why is it that the words “pallets” and “problems” are so often found in the same sentence? According to at least one comment from last November’s AIAG Call to Action, the analogy fits in the automotive supply chain as well, saying that the challenge of managing reusable pallets and lids is not just a “pain point” but an “eternal struggle.”  That event, held in partnership with Michigan State University School of Packaging, emphasized industry’s level of frustration, drawing 114 attendees and 9 exhibitors, as well as 35 others, including representatives from Hyundai and BMW, who attended via WebEx.

Key problems identified included such issues as unbalanced pallet-to-lid ratios, incorrect versions or mismatches shipped together (if at all), and mismatches and shortages resulting in expedited shipments and alternative packaging. 

Resulting from the Call to Action, an AIAG Materials Management Returnable Pallet & Lid Working Group was established. The Group recently sent out a survey on the topic to AIAG members. 

According to the group, the AIAG Materials Management Returnable Pallet and Lid Survey confirms that a focus on improving the tracking and management of pallet and lid assets used across the automotive sector will ultimately provide marked improvements in reducing shortages. 

Both OEM and Tier Suppliers have committed to addressing the issues of tracking and properly managing these automotive universally used assets. 

Survey responses revealed that almost half of respondents do not return incorrect pallets and lids they receive back in error, although several have tried unsuccessfully in the past. Several comments indicated that they use them, if possible. In effect, the assorted pallets and lids can act as sort of an informal pool. 

Comments as to causes of lid and pallet separation were telling:

“Inefficient handling/layout, carelessness, re- kitting empty load is an afterthought.”(Tier Supplier) 

“OEMs and Suppliers don’t have the discipline nor the data to identify this as a costly burden. ‘It is just packaging’ is a big paradigm that we need to shift away from in this industry.”(Tier Supplier) 

“Customers don’t have controls…often decouple totes from pallets/lids and have little or no concern for matching counts (received versus shipped).”(Tier Supplier)

The separation issue was identified as a moderate or severe problem for 78.2 of respondents.

A majority of respondents were willing to consider 3rd party management of their pallet and lid programs, with 69.8 either definitely or possibly willing to consider 3rd party. Comments suggested that the present situation was already somewhat akin to a pool. One response expressed concern that a 3rd party managed solution might cost more than the present approach.

With respect to tracking, 60.3% of respondents always or frequently track their reusable pallets and lids manually, while 41.3% always or frequently track such assets electronically.

Other telling results – 87.3% or respondents indicated that they do not benchmark their pallet and lid control process, and 55.6% of Tier responses indicated always or frequently resort to using expendable packaging due to a shortage of reusables. 

Moving forward the group has formed OEM and Tier panels to target initiatives based on results of the survey, established a returnable container contact list on the AIAG website to help return containers to the proper owners, as well as other initiatives.

To join the Working Group, please contact Morris Brown at mbrown@aiag.org. 

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