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A case of quality

12 December 2012

Why does the quality of pallets matter? Jane Gorick,MAN Everywoman Director of the Year and LPR UK md,explains why quality pallets should be at the heart of every supply chain. In the last five years, the two biggest co

Why does the quality of pallets matter? Jane Gorick,MAN Everywoman Director of the Year and LPR UK md,explains why quality pallets should be at the heart of every supply chain.

In the last five years, the two biggest concerns for supply chain managers have been sustainability and cost management. Consumers are making higher demands on brands when it comes to their environmental performance but, at the same time, the impact of the recession has meant that we are not willing (or able) to pay the premium for 'nice to haves'.

It becomes clear in these circumstances that the role of the supply chain in reducing vehicle movements, fuel consumption and raw packaging materials is vital.While historically, supply chains were often over-engineered to ensure they were able to cope with fluctuations in demand or disruptions to the flow of goods, the focus today must be on full asset utilisation and reducing costs - while continuing to maintain high quality standards.

One of the most overlooked elements within the supply chain is the pallet. Integral to the flow of goods from manufacturer to retailer, the pallet is a precision-engineered piece of equipment which can - in the case of LPR's distinctive red pallet - carry more than one and a quarter tonnes of material in a dynamic warehousing environment which can involve being 40 metres up in an automated warehouse. Of course, there are many types of pallet and this is where quality becomes important. A pallet which has been engineered to high quality standards, and which is treated with respect throughout its lifecycle, will cost far less to a manufacturer overall and have a much lower environmental impact than its 'one use' equivalent.

Ensuring consistent quality levels is primarily down to setting straightforward standards and collaborating with partners who are able to meet them. For example, pioneered by LPR in the UK, the one way trip pallet solution offers manufacturers a simpler, more sustainable system of managing their pallet pool. Instead of the manufacturer taking responsibility for returning the pallets, LPR's logistics partner - Norbert Dentressangle - picks up full loads from retailers' distribution centres improving the fuel efficiency of the pallet recovery. The one way trip reduces the administrative burden on the customer, decreases empty running and ensures LPR is able to keep the pallets 'turning'. As the pallets are sorted and repaired to exacting standards every trip, the overall quality of the pool is much higher.

With increasing automation, a higher quality pallet is needed to ensure the smooth running of the supply chain. The industry must strike a balance between a cost-effective pallet and one which is robust enough to stand up to the rigours of the automated supply chain. An LPR pallet, for instance, will complete on average 18,000 miles in its lifetime. By maintaining high quality standards, a manufacturer can optimise its assets and get maximum lifetime value from the resources available - ultimately, reducing the lifetime cost of each pallet.

However, despite the investment that goes into ensuring pallets are robust and of high quality, our experience tells us that most staff in the retail sector estimate the cost of a pallet to be minimal. This perception encourages a culture that does not put much worth in the pallet, which often gets misused in a warehouse, treated roughly or passed on to customers further down the supply chain, rather than being returned to the LPR depot for maintenance and re-introduction into the cycle. 'Pallet bashing' can add significant costs to the supply chain in terms of replacing or repairing lost or damaged pallets.

This is where communication comes to the fore. By focusing on quality, and communicating the benefits this will bring in terms of cost management and environmental performance, pallet pool operators can work together with manufacturers and retailers to ensure pallets are treated with the respect they deserve. Ultimately, measuring success will come down to the number of pallets which are kept 'turning' versus those which are lost outside the supply chain each year and also the overall level of damage the pallets sustain.

Going forward, brands, retailers and pallet suppliers must start working together far more closely if we are to take advantage of benefits such as the cost savings as a result of better pallet handling.

Additionally, matching inbound Norbert Dentressangle deliveries with pallet collections will reduce transport movements, leading to decreased carbon emissions and fuel consumption. Collaborative practice will help the supply chain industry to meet many of the challenges of the next few years, increasing market responsiveness and improving customer satisfaction, but it must be handled strategically.

The industry will need to work even harder to come up with the solutions which boost efficiency and effectiveness, while ultimately reducing cost and environmental impact. Throughout all of this, quality pallets will remain the 'red blood cells' of the supply chain.
 
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