3 Pallet Management Challenges for Manufacturers and Distributors, and How to Avoid Them

Today’s supply chain managers have their hands full coordinating goods as they move from the factory, to the warehouse, and finally to the store shelf. Even the smallest error can create a chain disruption that delays orders. That’s why it’s critical businesses don’t overlook one of the building blocks of goods movement: the pallet.

Of the nearly 2 billion wooden pallets in circulation across the U.S. each year, approximately 1.5 billion are remanufactured — repaired and reused, often after taking a beating in transit or at the store. If not continually maintained, they may not be able to hold up full loads of goods safely, and even if they can, some retailers use unsightly pallets as an excuse to outright reject a shipment. While wooden pallets are remarkably sturdy, they still need the same TLC other supply chain tools receive to ensure they remain reliable workhorses.

So, what steps should manufacturers and distributors take to keep their pallets viable? Let’s take a look at the top three challenges supply chain experts face when managing their pallets — and how to avoid them.

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Challenge #1: Getting the right pallets to the right place, at the right time

For supply chains with access to a finite number of pallets, forecasting accuracy can lead to headaches. Businesses that keep tabs on historical sales data are better prepared to realign their pallet supply at different locations based on expected demand. However, if we’ve learned one thing from 2020, it’s that “Black Swan” events aren’t just theoretical. Whole sectors went dormant as the COVID-19 pandemic spread, and while some businesses had plenty of product but no use for pallets to move it, others faced a severe shortage of pallets to move in-demand items (think toilet paper and paper towels).

In addition, pallet transportation offers its own range of logistical complexities. Selecting the right size pallet for a specific truck can maximize the amount of product leaving the factory or warehouse in each shipment, while choosing an improper pallet can lead to unprofitable, empty space onboard, and can potentially cause product damage as the load is lifted into the truck.

Challenge #2: Keeping pallets shipshape and in circulation

CHEPThe loss of even a few pallets can cause disruption within the supply chain, especially when demand is high and supply is low. To avoid completely writing off pallets, businesses may invest in repairs — but the repair process can be costly. Lumber costs have skyrocketed 60 percent this year, and even the nails used must be fit for each specific pallet. Companies are faced with a costly choice: invest time and resources in keeping pallets viable, or include a line item for new pallets in each year’s budget.

Challenge #3: Staying up to date with pallet safety and compliance

Businesses across industries are re-evaluating their safety protocols — and many of their efforts start in the supply chain. Managers are continually absorbing new regulations on two fronts: (1) policies aimed at protecting the goods moving through each step of the supply chain and (2) policies aimed at reducing risk of employee harm. Although these regulations may not seem as if they directly relate to pallets, their impacts are far-reaching.

Take, for example, fire codes and plastic pallets. Many of today’s fire suppression systems in the complete supply chain (production, storage, warehouses, stores) were developed to safely handle wooden pallets. In order for plastic pallets to be used and stored in a similar manner, without incremental investment in the existing fire suppression systems or insurance, NFPA 13, the International Fire CHEPCode and the NFPA 1 Fire Code require the pallets to be UL 2335 or FM4996 certified in relationship to those fire suppression systems. Both fire codes also have more restrictive requirements for outdoor storage for plastic pallets unless UL 2335 or FM4996 certifications are obtained. Other regulations ensure supply chains are heat-treating their pallets to eliminate the threat of invasive insects hiding in the wood. Any updates to the Food Safety Modernization Act (FSMA) or the Toxic Substance Control Act (TSCA) must also be watched closely to ensure pallets – and the goods they transport – remain in compliance, a time-consuming task.

The solution: Invest in a share-and-reuse model

As the supply chain grows more complex, managers spend more time focused on the data involved in running each aspect of goods movement. Less attention is paid to the smaller but still complicated details, such as pallet management. That’s why investing in a share-and-reuse model has become an attractive alternative.

With share-and-reuse, businesses participate in a pallet pool run by a third party. They can increase or decrease the number of pallets they need at any given time, allowing flexibility in the event of a significant demand spike, and work closely with the pallet pooler to determine which pallets are best fit for their specific warehouses, storage systems and trucks. The pallet pooler continually pulls damaged pallets out of circulation and manages repairs, saving the business significant raw material costs. In addition, the pallet pooler is responsible for keeping up to date with the latest regulations, ensuring their pallets are insect-free, and reclaiming pallets in a timely manner once called to avoid idle pallet build-up.

MerrillThere’s no need to struggle with the top three challenges facing pallet managers. If your business currently maintains its own pallets, consider working with a pallet pooler to carry that burden for you — managing the behind-the-scenes logistics of upgrading and repairing pallets, while ensuring your business has the high-quality pallets it needs on time.

Drew Merrill is Vice President of National Accounts, CHEP USA