Supply chains are becoming increasingly complex. They have a global reach, health-and-safety compliance is non-negotiable, and developed markets demand sustainable processes.
Markets have become more competitive than ever. Manufacturers must aim to find greater efficiencies wherever possible, while driving a socially and environmentally positive organisational agenda.
The solution to many of these challenges is an established supply-chain function – pallet pooling. Pooling is based on the concept of the share and reuse model underpinned by the principles of the circular economy.
Pay per use
For a manufacturer, distributer, or retailer, owning a pallet means the pallet becomes an obligation whenever it’s not in use. After usage, there are several costs then associated with the overall purchase of a pallet, comprising its retrieval, quality assurance, storage, and maintenance, to name a few. Customers who purchase their own pallets inevitably incur a higher overall cost to manage this function.
It makes far more sense for organisations to hire their pallets and pay for the pallet usage while their goods are in transit. With the pallet-pooling model, pallets are returned to the pool after use, and are no longer the responsibility of the customer.
A company such as CHEP, with approximately 300 million pallets and containers in circulation worldwide, is able to use economies of scale to provide cost effective solutions to customers. CHEP’s circular business model enables it to serve its customers through devising smart solutions for every partner in the supply chain thereby minimising the impact on the environment and improving the efficiency and safety of supply chains across the world.
By deciding to partner and share resources, in the last year, CHEP has helped customers achieve the following savings:
In addition, CHEP Sub-Saharan Africa has a source of timber for pallet manufacture and repair, thanks to its subsidiary timber plantations and sawmill. This ensures pallets can be repaired cost-effectively, and the savings passed on to customers. Coupled with cost effectiveness is the benefit of pallet availability resulting from CHEP owned timber plantations. There is a constant supply of pallets throughout the supply chain minimizing the impact from any global timber shortages.
Pallets and supply-chain logistics are specialised areas. Businesses can unlock far more value by focusing on their core business and outsourcing their pallet requirements from pallet-pooling specialists on a pay-per-use basis.
Economies of scale
Pallet pooling works due to scale and an extensive global infrastructure. At CHEP, we have built this scale with over 60 years of supply chain experience, supporting over 500,000 customer touch-points and best in class service, to be a market leader – we are the invisible backbone of the global supply chain.
Our network of more than 64 service centres across Sub-Saharan Africa allows customers to hire in Johannesburg, and/or de-hire in Windhoek. We are available in more than 60 countries across the world. Having a worldwide network of service centres also means products such as pallets, bulk bins, automotive crates, or retail-ready pallets are available at all times, to meet customers’ needs.
These pallets also require constant monitoring and maintenance, and specialist supply chain businesses have the systems to facilitate this efficiently. Using its network advantage and asset management expertise, CHEP can seamlessly connect supply chain participants, facilitating collaboration and ensuring a more efficient flow of goods through the supply chain.
Besides the financial benefits, there are also quality benefits to pallet pooling. Many multinational brands use established pallet-pooling providers to ensure the highest quality for their products. When white wood pallets are exchanged, there is a high likelihood that the quality is inconsistent. This can cause pallet and product damage as well as returns, meaning more repairs and replacements are required.
Products must be presented on shelf or delivered to the end consumer in the same condition they leave the factory. This requires pallets that can withstand the rigors of moving from factory to truck, to warehouse, and then to the retail or wholesale store.
At CHEP, we achieve this through pallets like our simple, effective, and resilient 1m x1,2m pallets. These have been refined to ISO standards over decades. Standardisation has been key to unlocking the value benefits of pooling. In a pooling network, pallets are collected and sent to specialised service centres where they are inspected and, if necessary reconditioned to ensure it meets the required quality standard. This also ensures that standard size pallets are of a consistent quality and suitable for automated processes.
Worldwide pallet suppliers like CHEP must always comply with the latest industry standards for customer service, technology, and pallet maintenance. By using a major pallet-pooling supplier, customers are then also following global best practice.
Having an international presence means that pallet-pooling organisations are always collaborating with partners across the globe. As such, when unpredicted situations arise, like the Covid-19 pandemic, we are able to take learnings and implement best practices from our partners on techniques to handle the risks and adapt quickly.
This makes pooling operators agile, and able to help customers become more competitive.
The pooling model also accommodates seasonal demand changes. Customers can always find pallets available during peak periods and can then return pallets to the pool during off peak periods.
The pay-per-use approach used in the pallet-pooling model is inherently sustainable. The share and reuse of pallets means fewer resources are wasted thereby decreasing overall costs– the very definition of the circular economy model that many sectors are shifting toward. In a resource-constrained world, circular business models like those operated by CHEP are recognised as a practical business solution enabling the world to trade more responsibly. By replenishing what it extracts and providing its products via a service, CHEP helps reduce empty transport miles, decreasing the overall CO2 impact to the environment, and both the constant pressure on finite natural resources and waste production typical of conventional linear business models.
Ultimately, any manufacturer or consumer-goods supplier wanting to be globally competitive should consider becoming part of the circular economy and partnering with a globally integrated supply-chain solutions company.