A new best-practice Guideline on Pooled Equipment Management (pallets) has been released by the Australian Logistics Council with hopes of underpinning greater efficiency in theAustralian supply chain. Some critics, however, feel that it misses the mark.
“The Australian logistics industry is heavily reliant on Pooling Equipment and the new ALC Guideline is an important step forward for the industry, as it delivers for the first time an industry-wide approach to the use of pallets,” said Michael Kilgariff, ALC Managing Director, in announcing the release of the new Guideline (click here.)
“Pallets are a critical link in the supply chain because they enable goods to be moved efficiently and effectively from producer to wholesaler and retailer, removing the need to unpack and repack goods. The pooling equipment system has to work on the transferring of responsibility for pooling equipment as the goods that sit on them move from producer to consumer.
“It is everyone’s interests that the system works efficiently and effectively because the cost of damaged and unaccounted for pooling equipment is inevitably borne within the supply chain. The key is to be aware, understand, and build an accurate process that follows the goods as they move through the supply chain. This gives rise to a set of responsibilities and expectations on the part of all parties handling pooling equipment, which are set out in the ALC Guideline.”
Kilgariff observed that with the logistics industry accounting for more than 8 percent of GDP, any practice which undermines industry efficiency is bad for the sector and undermines the efficiency of the Australian economy. “With literally millions of pallets in circulation, there simply must be a nationally consistent and industry wide approach to their use.”
Shortly after the Guideline announcement, Neil Chambers, Victorian Transport Association (VTA) chief executive, stated in one article that while the guideline is a useful portrayal of existing practices established by retailers and pallet hire providers, a mandatory code of conduct is needed to govern pooled equipment hire practices and dispute resolution. He says that certain parties, especially transport operators and small businesses, are imposed with significant burdens, due to the manner in which accountability for pallets is treated.
“The VTA believes that it’s time for the Federal Government to enquire into pallet management practices and conditions in Australia, and for a mandatory Code of Conduct to be developed and implemented,” Chambers was quoted.
He stressed that many receivers also have “delay days” policies, meaning that the pallets remain on the accounts of the suppliers or their transport companies for several weeks in practice. “This results in the receiver getting the benefits of using the pallet without initially paying for having it.”
As for the ALC Guideline, it is based on six pallet management fundamentals aimed at providing greater standardisation along the entire supply chain based on a common set of understandings. It also articulates the roles and responsibilities of the various players who benefit from their use, including companies which use pallets or have a responsibility for their safe-keeping before their return to pooling equipment companies.
“Having inconsistent, contradictory or generally misunderstood practices and procedures across the industry is in no-one’s best interests, as it adds to costs and diverts resources away from an organisation’s core business,” Kilgariff said. In addition to spelling out the roles and responsibilities of all parties, the Guideline also includes a best practice outline, a plain English guide, and dispute resolution advice and procedures.
The document is the result of extensive consultations between a wide range of supply chain participants under the auspices of the ALC Pallet Working Group, which included pallet pooling companies, suppliers, transporters, retailers and other industry bodies, and led by ALC.
ALC will now work with the Transport & Logistics Industry Skills Council to develop an appropriate training package to support widespread industry knowledge and application of the Guideline’s best practice principles.
ALC said it recognised that the Guideline might not be fully endorsed by all industry participants and therefore intends to convene another Working Group in the next 12 months to review how the Guideline has performed.