November 28, 2013
Many supply chains are operated with pallet-based material flows. It is worthwhile to take a look to the typical issues, which pallets can cause to the business.
- Product damages. Pallets typically do not have any protection on the sides, making the goods vulnerable for any hits or other mishandling during the distribution. It is also typical situation that the goods are overhanging outside the pallet dimensions – this substantially increases the risks for product damages.
- Secondary packaging materials. Pallets require a large amount of secondary packaging material (stretch foil, other materials), to keep the load secured and stable. This is naturally increasing the costs for the operation. Also, when using large amounts of secondary materials, it increases the carbon footprint of the supply chain.
- Product inventory levels. Typically, pallet-based distribution guides the operations towards large unit loads and delivery quantities. Compared to more streamlined operations with small lot sizes (often with Continuous Replenishment approach), this often leads to the situations where product inventory levels will increase in many phases of the supply chain.
- Handling costs. Pallets are typically slower to handle compared to many other goods carriers – one example being the loading ans unloading of the vehicles. Other example of the time-consuming operation can be identified in retail supply chains, where goods are first taken away from the pallets in the store backroom, before moving the goods to the sales area. All these type of additional handling steps put more pressure to the labor costs. Another handling cost linked to pallets is the needed handling equipment: each phase of the supply chain needs to operate pallets with a specific device (either forklift, pallet-jack or other equipment).
- Health & safety. Pallet itself is a heavy unit, and in some occasions there might be situations where empty pallets are lifted manually. Maximum weight of manually operated unit loads nowadays has tight requirements, set by the industry bodies, labor unions and other parties. There are also substantial costs occurring to the companies from the sick leaves, injuries and warranty payments etc., linked to Health & Safety issues of the supply chain. Therefore, it is important for the business to minimize the need of manual heavy unit load handling in the supply chain.
To discuss more about alternative delivery methods and goods carrier solutions, please contact K. Hartwall. We are willing and capable to increase your Supply Chain efficiency.