The evolution of commerce has dramatically impacted warehouse and DC operations, forcing all businesses to re-examine their supply chains from end-to-end. CFOs can no longer accept the supply chain as a necessary cost center. Rather, they demand innovative and effective supply chain management that minimizes costs at worst and turns a profit at best.
Innovation doesn’t always come in the form of a revolutionary tool or methodology. Sometimes innovation can be a better way of doing simple things. In fact, when it comes to warehouse and DC operations, hidden savings can often be found in easily overlooked processes.
Sorting Out the Problems
Any busy distribution center or warehouse handles a constant flow of pallets and containers. These assets are coming from multiple places and many have different places to go next. Managing this flow of pallets and containers is a complex logistical equation, but it starts with a constant principle: sorting.
The days of using a pallet and tossing it out for disposal are in the distant past. Fiscal priorities and sustainability concerns are working in tandem to build an ever-more circular and closed loop of shipping assets including pallets and reusable containers. While some standardization exists, these assets can’t all be handled in the same manner. Before they can efficiently move to their next destinations, they must be effectively sorted.
The pallet has long been the workhorse of shipping and transporting goods. Increasingly, reusable plastic containers and totes have also become mainstays of the supply chain because they reduce product damage and add efficiency to the chain for certain types of products. It’s imperative that both pallets, containers and totes get processed effectively to prevent disruption of the supply chain. Each has its own characteristics that must be considered when being sorted.
Containers and Totes
Reusable containers and totes function best in a closed-loop system where they can be tracked along every stage. If these assets leave the network, it can not only disrupt the chain but hit the company on the bottom line. After all, these containers don’t come free. Efficient container and tote sorting can save time and money, but often the effective handling of these empty totes can be an overlooked task, creating inefficiencies.
One of the great things about containers and totes is their ability to be adapted for specific products. But, as with many things, this upside can have a downside. In this case, the downside is the number of different types of containers that must be sorted after use. Containers might include RPCs that transport certain kinds of food including produce, meats and eggs. These must be sorted by the pooler or vendor if they don’t belong to you. Depending on the cargo they carried, they may need to be washed. Each tote must also be examined or inspected for damage, and faulty assets must be identified and removed from circulation.
As the number of containers and totes in use increases, so too does the complexity of sorting and washing these assets. Unfortunately, it’s not something that can be procrastinated. Delays in addressing empty totes could mean a lack of assets elsewhere in the chain when needed. They can also stack up quickly in busy facilities, creating an overwhelming backlog that could be time and resource consuming to address (not to mention a potential workplace safety hazard). But efficient sorting and processing of RPCs can keep the pool size down, limiting overall supply chain costs.
Though a standard 48” x 40”, GMA (Grocery Manufacturers Association) pallet is the most commonly used in the U.S., it certainly isn’t the only pallet size in the supply chain. There are countless different sizes and configurations in use in North America.
Like reusable plastic containers, used wooden pallets must be moved out of the warehouse and to their next destination, whether that’s for return, reuse or recycle. Also similar to RPCs, the pallets may belong to different poolers and manufacturers. This, of course, means they must be sorted and returned to the respective owner.
Sorting and returning pallets can actually entail far more than you might expect. Consider a hypothetical in which your facility unloads 10,000 pallets on a given day. Say 80 percent of those are standard GMA pallets, but the remainder might be a mixture of 42’x42’, 48’x48’ or even 48’x42’. This variation in sizing prevents them from being easily stacked together.
Furthermore, a percentage of those pallets might belong to a certain pooler that picks up pallets from your facility. But others belonging to another pooler might need to be delivered to an offsite return point. Other pallets might belong to a vendor who expects them back or will charge you for them.
And, we haven’t even touched on sorting out the damaged pallets. Even if you own all the pallets in a closed loop chain, they’ll need to be sorted out by condition to account for damaged or destroyed pallets.
As DC facilities are pushed to their maximum capacities, where does this sorting take place? Where do you store all the different pallets that have different sizes and destinations? It’s not uncommon for a retailer or DC to have multiple agreements in place for pallet services – and this can create a problem.
Sorting Out the Solutions
The reality is that pallet and container management simply isn’t a core competency of most distribution centers. But given the time and resources just sorting pallets and containers can require, the process needs to be considered a significant part of an overall asset management plan.
Not incorporating dedicated attention to sorting activities in your facility deprives it of an opportunity to add efficiency and save money. Depending on the volume of containers and pallets processed, a dedicated employee or staff might be warranted to perform this important but often discounted task. In some cases, third-party specialized pallet management might be worth its return on investment.
Deciding how to handle pallet and container sorting comes down to a thorough analysis of your inbound and outbound assets, where they’re coming from and where they’re going next. Armed with this information, you can better develop a process that accounts for the necessary handling of used pallets and RPCs, preventing disruption of your supply chain rather than causing it.
Mike Hachtman is President and CEO at Relogistics Services, LLC.