The pallet is a seemingly simple tool used day in and day out in grocery distribution, and normally given little thought by the typical retail exec. As it turns out, though, these pillars of the retail supply chain — and the companies that provide them — are poised to help retailers achieve greater efficiencies in transportation, operations and even in the store environment.
Indeed, in this day and age of increased supply chain efficiencies, as retailers are encouraged to constantly re-evaluate their supply chains from a systems-based approach, pallet companies have evolved to become supply chain service providers themselves.
Led by Atlanta-based CHEP, which is part of supply chain logistics company Brambles Ltd., and joined by Peco, iGPS and several smaller companies, including a new not-for-profit network of pallet providers, the industry is helping its manufacturer, distributor and retailer partners tackle challenges while developing innovative solutions, including smaller pallet sizes and enhanced food safety measures.
“Pallets are the literal foundation of the fast-moving consumer goods supply chain,” asserts Vishal Patell, VP of retail supply chain solutions for CHEP, which now serves more than 60 countries and provides around 300 million pallets in total. “Most, if not all, material-handling, storage and transport systems in the domestic supply chain are heavily reliant on good-quality pallets — the combination of which is what results in continuous productivity improvement, helping keep the cost of goods lower for the end consumer.”
Today, CHEP provides its customers comprehensive supply chain solutions to help them become more efficient, reduce end-to-end supply chain costs and be more environmentally sustainable, according to Patell. Services CHEP provides include value stream mapping, platform mix optimization, product damage reduction, packaging performance testing, store fulfillment solutions, unsalables reduction and reverse logistics.
Patell is particularly excited about CHEP’s work in freight collaboration. “We’re leveraging our unique position in the supply chain to drive significant cost reduction to both manufacturers and retailers by optimizing private feet movements for individual entities or through three-way collaboration,” he says.
“Retailers deliver CHEP pallets to manufacturers, and on the return, they pick up product — this eliminates empty miles and helps them unbundle inbound logistics costs,” explains Patell.
Orlando, Fla.-based iGPS, which specializes in plastic pallets, likewise has been looking for ways to provide “customized supply chain solutions” to its clients, according to CEO Jeffrey Liebesman.
“We work directly with our customers to assess their individual businesses and make recommendations accordingly,” he says. “We are seeing a concerted and significantly aggressive effort in the grocery supply chain to drive down the total cost of business — from both the manufacturers and retailers.”
In addition to “making every penny count,” food companies have been placing a growing emphasis on product hygiene, Liebesman observes. “iGPS has been helping our customers address each of these issues through reduction of pallet/shipping weight, uniformity in automated facilities, minimizing product damage, eliminating splinters and preventing absorption of bacteria, to name a few,” he notes.
One Size Doesn’t Fit All
While pallets have traditionally come in uniform sizes, a new trend in the industry is the introduction of smaller, half-size or quarter-size pallets. These designs have been driven by the boom in smaller retail formats, as well as the need for more agile designs to move in and out of stores. Some pallets are even finding their way into stores as elements of end caps or displays.
“We’re borrowing a little bit from the European model,” notes Marshall S. White, president of White and Co. LLC, an independent packaging research and consulting firm based in Blacksburg, Va. “I think it’s an impressive trend.”
CHEP’s Patell says he sees fractional pallets, which are being used to drive in-store growth, as the biggest trend in the industry today. “CHEP’s half-pallet platform solution is proving to be a popular option for manufacturers and retailers, because it increases delivery flexibility and decreases operational costs, especially with inventory optimization and pick operations in multiple store formats,” he explains. “It can also be used as a platform to build merchandising displays at the end of an aisle or in high-traffic areas, as well as a platform for storing and displaying bulk produce.”
Patell estimates that CHEP’s half pallets can reduce labor and handling costs in warehouses by 25 percent. He also links the half pallets to reduced out-of-stocks for high-volume products and better sell-in for new products and seasonal promotions.
Another company that’s rolling out smaller pallets is Oconomowoc, Wis.-based Orbis Corp. Orbis specializes in reusable packaging and runs a reusable plastic pallet program. Its newest product, Pally, is a mobile pallet designed for quick load at the distribution center and quick unload at the retailer, according to Samantha Goetz, Orbis’ marketing communications manager.
The company has also launched a 42-by-30-inch small-format pallet. “Our small-format pallet was specifically designed for frequent product deliveries into smaller-format retailers,” explains Goetz. “It enhances maneuverability in tight spaces. The mobile Pally was also designed for this application.”
Pally is additionally being used for omnichannel picking and staging for store pickup of e-commerce items, notes Goetz. She expects its popularity to grow as omnichannel operations and smaller-format stores increase.
Along with new product development, Orbis remains focused on safety and efficiency, according to Goetz. “The need to safely and efficiently move product from the DC to the retail aisle is more important than ever, to avoid product damage and to reduce labor costs associated with deliveries and merchandising,” she says. As such, Orbis offers a full suite of asset-tracking, management and cleaning services to support its pallet programs.
New Model on the Market
In addition to the major players and niche providers, there’s a new pallet company on the market — but this one is a not-for-profit, consisting of a nationwide network of hundreds of certified pallet manufacturers, recyclers and distributors. Woodbridge, N.J.-based 9Bloc was founded in 2011 with a mission “to provide a high-quality, independently inspected pallet pool to U.S. manufacturers and distributors, with on-demand services and transport logistics at the most competitive pricing structure.”
9Bloc’s white presswood pallets were designed to meet the specifications of major warehouse club chain Costco, based in Issaquah, Wash. The pallets can be leased, rented or purchased. The company also offers web-based tracking software to help kee tabs on its pallets.
White and Co.’s White says he believes the 9Bloc model will grow, as “it’s another alternative that can help retailers control, if not reduce, their supply chain operations costs.”
“Pallets are the literal foundation of the fast-moving consumer goods supply chain.”
—Vishal Patell, CHEP
“We are seeing a concerted and significantly aggressive effort in the grocery supply chain to drive down the total cost of business -from both the manufacturers and retailers.”
—Jeffrey Liebesman, iGPS