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CHEP cuts complexity and cost in the tricky last mile

28 March 2013

CHEP sets out to reduce complexity in the supply chain's last mile, which is said to account for 65% of total supply chain costs.

A campaign by a leading pallet pooling business to reduce the number of different formats currently found in the challenging "last mile" of the supply chain has been welcomed by blue-chip FMCG manufacturers and retailers.

A customer forum facilitated by CHEP - the global provider of pallet and container pooling solutions in question - and attended by executives from companies such as Britvic, Coca-Cola, Heinz and Nestle, examined ways of tackling the mushrooming complexities in the last mile. Although only a short distance, it accounts for some 65% of the total supply chain cost and in some sectors, bespoke and non-industry standard packaging and handling solutions have been introduced as businesses strive to reduce costs and increase efficiencies. This, in turn, has led to suppliers having to increase the different ways products are packed and delivered.

Research conducted by CHEP between January - April 2011 on the supply chains of 41 retailers in seven European countries identified that 24 different packaging formats and 55 different packaging product platforms are in use in this crucial last mile of the supply chain.

"CHEP is at the heart of the supply chain and so ideally placed to see both the changes that are taking place and to share ideas as to how these final stages can be simplified," says John Kenna, director market & customer insight at CHEP EMEA. "This part of the supply chain is changing fast. We feel that through collaboration and offering innovative solutions which can be integrated into our equipment pooling model it will help our customers adopt simpler procedures." According to CHEP, a key issue is that "last mile" logistics is at different stages of development across Europe. In some countries, such as Greece and Italy, fullsized 1208 pallets are still used which are then unloaded by hand at the retailer and the products are manually put on the shelves.

While in Germany and Spain, smaller, fractional pallets - of which the 600 x 800 is the most popular choice - are being increasingly utilised to take goods in retail ready packaging directly on to the shop floor where they can act as gondola ends and merchandising units.

"This complexity obviously puts added pressure on a manufacturer as several retail customers may be taking the same product but require them on different pallet formats, resulting in multiple SKUs for what is essentially the same product," adds John. "Frequently, full-sized pallets have to be broken down into smaller units which entail further handling, so adding delay and cost to the process. The complexities reduce flexibility and slow up the time it takes to get a product onto the shelves. CHEP can influence this drive towards increased standardisation due to its existing pan-European networks." Other topics discussed at the CHEP forum included ways to eliminate the need to load 4 x quarter pallets on to a "slave" Europallet for road journeys which takes up more truck space and adds complexities - and therefore cost - to getting products to the consumer.

Another challenge to simplifying the last mile is posed by the continued growth in urban convenience stores. These stores have limited storage and display space and smaller aisles so they require regular replenishment with products ready to go directly on the shelf. However, as they are also likely to be in residential areas, the noise associated with deliveries is increasingly an issue. To help with this issue, CHEP has designed and launched a new quarter pallet dolly in Austria and Switzerland. The dolly is helping retailers replenish fast-selling goods in-store during peak periods as they can wheel goods from the storeroom to the aisle without the need for pallet-moving equipment which can interfere with their customers' shopping experience.

"We have designed the dolly to create a mobile promotional unit by providing a rolling alternative base for CHEP's 600mm by 400mm plastic quarter pallets, which our retailers typically use in stores for promotional displays," explained Stefan Jakoby, Country General Manager for Austria & Switzerland.

"In addition, the dolly could provide global manufacturers with a solution that they can use across different regions which would deliver significant efficiencies to their overall supply chain," he added.

CHEP is considering rolling out the new dolly across other European countries and in the Benelux region it has already gained PIEK certification which will ensure that similar products meet tough Dutch Government legislation regarding noise output from inner city retail locations which means that noise from night-time deliveries must not exceed 60 decibels.