Pallet management might not be the world’s oldest profession, but would you be surprised to know that it has been practiced to varying degrees for the last 80 years?
Pallet management dates back to the introduction of centralized pallet procurement and pooling during the Second World War. Then there was the first, albeit unsuccessful U.S. pallet rental program, launched in San Francisco, circa 1946. As the decades passed, approaches gradually became more sophisticated. Some have endured while others, such as pallet exchange and pallet banking, have faded.
The goal of enlightened pallet management, whether performed by expert pallet users or by pallet industry professionals, is to optimize supply chain performance by managing various aspects of the pallet life cycle. Piece of cake, right? Let’s look at noteworthy pallet management approaches that have helped propel supply chains, both past, and present.
Pallet pooling and standardization
Dating back to the U.S. military in the 1940s, pallet standardization was recognized by decision-makers as critical to the reuse of pallets in the military supply chain. The development of prescribed pallet specifications enabled military depots to easily reuse emptied pallets received from elsewhere. Standardization was to become a key feature in the development of pallet systems after World War ll such as the GMA (GPC) program, CHEP, and many others.
Talking about standardization, people may forget that as recently as the mid-1990s, the U.S. fresh produce industry utilized 37 different pallets, depending upon the commodity and growing area. That lack of a common size resulted in material handling headaches. The eventual migration of produce onto the 48×40” helped improve distribution center operations for retailers, ensuring compatibility with racking systems and eliminating the labor required to repalletize or double-pallet unit loads of merchandise. Pallet standardization remains a key ingredient of managed pallet systems today.
Why use two if one will do?
World War ll saw military logisticians take a broader perspective of pallets and their role in the supply chain. Aside from centralized procurement and the promotion of standards to promote reuse, another tact taken was to specify inbound pallets so that they could use the same pallets for outbound, as outlined in this article from World War II. It is still an idea that can save companies money.
Pallet exchange systems
From the 1970s to the 1990s and beyond, pallet exchange was still a big deal in the United States and Canada, especially in the grocery industry. If a truck arrived with 20 pallets under load, for example, then 20 empty pallets were returned. Some retailers also allowed empty pallets to be accumulated until a full truckload of pallets could be returned to the product manufacturer.
Grocery pallet exchange was based on the 48×40” GMA in the US and the 48×40” CPC (Canadian Pallet Council) pallet in Canada. It was a great innovation in its day, helping create pallet reuse opportunities, saving pallet users money, and reducing solid waste generation that resulted from single-use pallets. Companies that succeeded in pallet exchange typically had in-house pallet managers or pallet coordinators to ensure quality, asset retention, and cost control.
There were widespread issues, however. Trucking companies generally did not want to be involved in pallet management and neither did retailers. Broken pallets became increasingly commonplace and were associated with product damage, injury, and other inefficiencies. Pallet exchange eventually was phased out by major grocery retailers in favor of pallet rental and one-way acceptance of white wood pallets. This change was transformational for pallet users and pallet manufacturers alike. In the North American context, large-scale pallet exchange is no longer popular.
Pallet banking programs emerged in the 1980s and 1990s as a way to help reduce the cost of pallet reverse logistics. A carrier could drop off unneeded empty pallets at a participating pallet recycler, and receive a credit. That amount of pallets could subsequently be picked up in another region from another participating recycler, thus eliminating the need to haul empty pallets substantial distances. Today, pallet banking is not widely practiced. The introduction of pallet rental and the end of pallet exchange definitely took a bite out of the pallet banking market. And as pallet recycling evolved and grew, the used pallet market became increasingly harmonized. Pallets could be readily bought or sold across the country without the need to belong to a particular pallet banking scheme
Moving pallets on paper
For decades, leading pallet management providers have utilized a broader perspective to “move pallets on paper”. This technique can be used where to help reconcile pallet imbalances between multiple parties without physically moving them.
Pallet recovery/retrieval was discussed at NWPCA meetings in the late 1980s and early 1990s as an emerging best practice. As the name suggests, retrieval programs involve picking up empty pallets from the point of unloading, refurbishing, or remanufacturing them as necessary, and then returning them back to the original shipper as needed. Successful retrieval programs provide benefits such as a cheaper cost-per-use opportunity through reuse, removal of unwanted empty pallet accumulation at the end customer location, and can provide a Just in Time supply for the product manufacturer.
Today, pallet retrieval models can be centralized, with all pallets returned to a single service center, or decentralized, involving several collection centers. Retrieval networks can be customized to optimize reverse logistics, depending upon the supply chain.
Vendor managed inventory
Another niche pallet management approach is vendor-managed inventory. This approach involves a “Use one, replenish one” mentality. It works best where a high trust relationship exists between pallet vendor and pallet company. Some pallet companies have offered customer inventory management since at least the 1990s. In vendor-managed inventory scenarios, pallet company employees regularly take a pallet inventory at the customer location and then replenish supply as needed.
Dock sweeps involve the sorting, refurbishment, repositioning, or sales of empty pallets and other recyclable materials for customers. They may provide a complete or partial reverse logistics service. It is an approach most commonly utilized by businesses that generate high volumes of empty pallets, such as retail distribution centers.
Unlike pallet management approaches such as pallet banking or retrieval, which involved managing other people’s pallets, the pallet rental provider maintains ownership of pallets. The launch of CHEP in Canada and then the U.S. over the 1980s and 90s provided an introduction to pallet rental for much of the North American market.
Pallet rental proved to be popular in helping product manufacturers more easily budget their pallet expenditure and in minimizing stock on hand when not needed. Aside from enjoying more consistent quality, retailers and transport companies benefited from no longer being involved in pallet exchange. Other pallet rental providers of note included PECO, coming onto the scene in the latter 1990s, and iGPS in the following decade. The pallet rental model was replicated in other industries, such as Perfect Pallets, which serves the printing industry.
Pallet brokering/3rd party procurement/total pallet management
Pallet brokerages have continued to grow in importance since at least the early 1980s. Using their deep knowledge of the pallet market, brokers can act as expert procurement providers for pallet customers, finding competitively priced pallet supply wherever and whenever needed by the customer. Pallet brokerage and management relationships also extend to other services sometimes embraced as “Total Pallet Management” (TPM), including not only procurement but other offers such as pallet design review, retrieval, or dock sweeps. TPM programs can be highly customized to meet the needs of a particular application.
What about tracking technologies
One of the basics of successful pallet management is keeping track of where pallets are, so they can be recovered. Many years ago, pallet control was in large part being on top of the paperwork – the pallet slips of pallet bills of lading that were used by front line employees to document deliveries and product receipts, and the ledgers to record them.
The introduction of specialist software gradually made pallet control easier and more accurate. The promise of fully automated pallet data capture and location tracking has been an ongoing area of interest over the last 20 years or more when the potential of pallet RFID was first addressed at an NWPCA meeting. Pallet tracking technologies have been slow to win acceptance, but they continue to improve and generate greater interest as the value of supply chain visibility becomes increasingly recognized.
The bottom line is that pallet management best practices can help supply chains create more value for stakeholders and through reuse, to make them more sustainable. There is no “one size fits all” when it comes to pallet management. Each supply chain presents its own unique challenges and opportunities that can be leveraged through pallet management expertise.
Did you know that FALM was created over 26 years ago by a group of leading pallet companies to address the growing need for regional and national pallet management programs? In the last quarter-century, a lot about pallet management has changed, but our dedication to providing the best possible pallet management solutions has not. To find out more about how FALM can help your pallet program, visit us at www.falm.com or call today.