The statistics for reusable pallet and container loss can be looked at as bad and inevitable, or as a huge opportunity for supply chain cost reduction. This is a call to action.
If your company is suffering from serious loss or theft of reusables, it just might misguidedly find some solace in knowing it isn’t alone. Pallet and container loss numbers can be staggering for some companies, and for several industries overall. (Take our reusable packaging and pallet loss and theft survey at this link.)
For example, at the 2015 Reusable Packaging Forum held in Chicago, attendees at this Reusable Packaging Association event listened to some sobering numbers related the often frustrating challenge of reusable asset loss.
- The cost of replacing “lost” reusable packaging and pallets in the North American auto industry is around $750 million per year, according to a 2010 survey by the Auto Industry Action Group.
- The U.S. Postal Service experiences a loss of about 20 percent of its pallets annually.
- The automotive sector loses roughly 15 to 20 percent of its pallets and lids annually, according to Deloitte.
- Prior to rolling out RFID, Mission Foods, a leading taco and salsa producer, was losing 100 percent of its reusable containers each year, costing the company around $3.5 million for replacement.
- In total, plastic pallet and container loss within the U.S. registers between between $800 million and $1.5 billion annually.
Additionally, losses are substantial in other sectors as well:
- Beer keg losses total over $52 million each year in the U.S.
- According to a Rehrig Pacific white paper, milk crate losses amount to between $80 to $100 million annually. From the same report, commercial bakeries have an annual loss rate of about 30 percent of their plastic containers.
But What About Indirect Costs?
While the costs identified above relate to container and pallet replacement, there are also significant negative impacts associated with the loss of reusable containers, which in some applications can quickly outweigh the direct cost of asset replacement. Consider the following potential pain points:
- Reusable container shortage can disrupt production, causing expensive downtime and downstream ripple effects.
- Reusable container shortage can delay order processing and delivery, resulting in increased labor for assembly and shipping at the warehouse and stocking at stores, additional freight charges, and potentially lost sales at retail.
- Reusables shortage can require the emergency purchase of expendable packaging, as well as related inefficiencies in terms of product damage, extra handling, downstream incompatibilities, solid waste generation, degraded worker safety, and so on.
- The risk of reusable container shortage can cause companies to increase their pool to a larger size than should be necessary to ensure they do not run out.
In the final analysis, leakage through theft, neglect or other organizational gaps can negatively impact the effectiveness of otherwise amazing successful reusable packaging applications. With all due respect, however, when I hear about such losses, I just get excited. Sure I feel horrified by the problem, but I, like many practitioners in the field, am absolutely ecstatic about the opportunity to guide you toward plugging those leaks and providing you with the tools to deliver significant bottom line savings to your company.
The thing is this – I am passionate about reusables and the powerful positive impact they can provide to logistical systems. The costs of leakage such as those listed earlier undoubtedly deter some companies from choosing to start or to expand their deployment of an otherwise financially and environmentally attractive supply chain best practice.
The key point in all of the above is that such losses do not have to inevitable, and they should not be dismissed as simply a cost of doing business. If your operation is like most others, it can take a few simple steps towards curbing unnecessary costs and unleashing the amazing potential of reusable pallet and packaging systems. In the near future, we will circle back to explore such opportunities in more detail. Thanks for reading.