The Pallet Stops There, The Cost Stops Here

“Why can’t we just all get along?” Jack Nicholson asked the Martian invaders in his role of U.S. President in the movie Mars Attacks!  That was just before he got zapped. When it comes to reusable transport packaging, the good news is that we can. The challenge is to set the correct framework of asset accountability in place to make it happen, and to make it keep on happening.

Why can’t we all just get along?

One of the fundamental concerns for mobile supply chain assets in general, and reusable transport packaging in particular, is the issue of ownership and accountability. Unless ownership is transferred to the carrier or the consignee, then other companies have accepted custody of the reusable transport packaging, oftentimes without any formal accountability for their safe stewardship. If you aren’t the type of person who would leave the car unlocked with the keys in the ignition so the neighbors can take it for a spin whenever, why would you blindly send your reusable transport packaging to a trading partner without a firm understanding of expectations. To quote plastic pallet visionary Lyle Shuert, you have to have “some skin in the game” if you are going to be successful in motivating trading partners to return your pallets.

I can’t tell you how many times I have received letters or telephone calls from angry or bewildered shippers saying that they have shipped x amount of pallets and we haven’t returned any, or they have been charging a pallet transfer charge but that it has been deducted from the invoice. Or they have shipped reusable containers but they weren’t returned.  After talking awhile longer, it turns out that they haven’t really made arrangements with anyone, or that’s the way they do business with other customers and assumed it would be our way also. So what happened to their unmarked reusable containers? The workers who sift through all the returns probably unwittingly sent those crates to the local plastic recycler. Planning and trading partner agreement makes all the difference.

In Australia, self-serving interests by some participants in the grocery industry pallet system have been a sore point for years, where the system struggles with excessive lost pallet charges, and practices of “unconscionable conduct.”  Inconsistent practices, lack of visibility, and the absence of a dispute resolution process all hamper the efficiency of the Australian system. With this in mind, John Stuart of Pallet Loss Prevention along others has proposed a Code of Conduct for the Australian Pallet Hire Industry.

In the upcoming August issue of Pallet Enterprise, I interview Belinda Junkin of the Canadian Pallet Council.  She says that for decades, the cooperative pool has relied on the goodwill and cooperative aspirations of members, but now more than ever it really is in opposition to the more basic profit motives of members, which as a result, puts members at odds. For this reason, CPC has increased its emphasis on accurate tracking through its CTSweb software and has moved to 3rd party inspection of pallet service providers. More accurate data and more consistent quality will help make the system more equitable. For more detail, check at Pallet Enterprise next month.

Other ways to make trading partners more accountable is through ownership transfer (with cost itemized or built into merchandise cost) or deposits. Deposits on containers and pallets have become less popular in some industries – usually because they are a pox to customers and therefore usually take a back seat to sales. There is a way to tie it together, however. Reusable asset management consultant Joseph Harrington, PhD. (www.hgaps.com), for example, suggests tying sales performance not to gross sales, but to a net figure that deducts for reusable transport packaging that cannot be recovered from specific customers assigned to the sales person. In this way, the sales representative is more motivated to work with the customer to achieve return.

These are just a few ideas.  Accountability is one of the essentials to remember for reusable transport packaging being handed off to trading partners. Don’t just assume it will happen. Plan for it to happen – and keep on happening.

This article first appeared in 2010 at www.packagingrevolution.net.

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