BlogPallet PoolingCost effective pallet management

If you work in logistics, you’ve probably had to deal with pallets quite a bit. You know how hard it can be to find an economical way of returning them to the start of the supply chain for reuse. You’ve dealt with the hassle of sorting them, stacking them, and getting rid of unusable pallets, all while trying not to cost the company too much money. You may even have hoped that some enterprising DIYers would swing by to “reclaim” used pallets and spare you the trouble of disposing of them. These are common challenges in the supply chain, but there are solutions. One solution that many companies turn to for help managing their pallets is a pallet pooling provider. So, how does pallet pooling work, and what are the benefits?

How Does Pallet Pooling Work for Me?

A pallet pooling company manages your pallets for you. Instead of buying your own supply of pallets, you rent them from a shared pool. The pallet pooling company ensures that a supply of pallets in good repair and ready for use arrives at your facilities when you need them. They’ll also arrange for the pallets you’ve used to be taken to other companies or back to your production facilities. A pallet pooling service provider takes care of the reverse logistics throughout the supply chain needed to recover these pallets for reuse by you or other manufacturers. By saving your company from having to manage its own pallet supply, a pallet pooling program reduces the complexity of pallet procurement, management, and recovery, reducing waste along with your Total Cost of Business (TCOB).

Why Choose Pallet Pooling?

Companies that choose to use reusable pallets and manage them in-house are essentially operating two separate businesses, as well as a parallel supply chain, just to provide their product with a shipping platform. Running a parallel operation adds significant transportation and labor costs to a company’s expenses, and it’s possible that reusable pallets may even end up competing with products for transportation and storage space. The result of managing one’s own pallet fleet is a waste of company time and resources, and a distraction from the core business.

Manufacturers who rely on one-way stringer pallets often end up buying top-tier pallets just to ensure their loads are accepted.

To avoid dealing with the transportation and management of reusable pallets, some companies choose to use basic one-way stringer pallets. These come in various GMA pallet grades that are mostly based on how many trips they’ve made through the supply chain. The best of these, a so-called “club grade” pallet, is one that has never been used, has had no repairs, and is available for a premium price. Unfortunately, you may end up paying that premium price over and over again just to ensure your end retailers will accept your pallets.

That’s because it is increasingly common for retailers to set quality criteria for the loads they receive from their suppliers, and one of these criteria is pallet quality. Club grade pallets take their name from the way club stores often display products for sale directly on the pallets they arrived on. These retailers—which are some of the largest in North America—don’t want their customers being turned away from a purchase by a stained or visibly degraded pallet. They often reject loads on the basis of pallet quality, and will look for new suppliers if a vendor disrupts their operations by repeatedly shipping them pallets of unacceptable quality. Manufacturers who rely on one-way stringer pallets often end up buying top-tier pallets just to ensure their loads are accepted, and must bargain for these high-quality pallets in the quantity needed from an increasingly complicated, interdependent supply chain of manufacturers and recyclers, where prices are not always stable or predictable.

Renting pallets from a shared pool offers substantial savings and a significant return on investment, which explains its adoption by the majority of major manufacturers and suppliers.

Clearly, reusable pallets are the better choice because their sturdiness makes them less likely to be rejected by retailers. But getting the most out of reusable pallets requires setting up a network to collect the pallets, sort them, repair them, and send them out again. Pallet pooling takes care of this for you, allowing you to do away with the costs of additional storage and maintenance facilities and the staff for those facilities. Transportation costs are also reduced, since a pallet pooling service does away with dead legs and loads that consist of nothing but pallets. Pallet pooling replaces these costs with a simple cost per load of pallets.

Renting pallets from a shared pool offers substantial savings and a significant return on investment, which explains its adoption by the majority of major manufacturers and suppliers. However, not all pallet pools are created equal, and those based on reusable wood block pallets still have issues, including acceptance by retailers.  

Choosing a Pallet Pool that Works for You

Pallet pooling doesn't work as well with wood pallets as with plasticMost pallet pooling services offer reusable wood block pallets. While much of the supply chain was built around wood pallets like these, rising transportation costs, tightening quality standards, and the need to improve efficiency are starting to make reusable wood block pallets unappealing to companies. The disadvantages of reusable wood pallets include:

  • Product Damage: Wood boards can be broken without much trouble by heavy machinery in the supply chain or during transportation, and this can be exacerbated by multiple uses or touches through the supply chain. While the pallet may remain mostly usable, rough edges, surfaces, and splinters from a damaged pallet can tear or puncture product packaging, rendering it unfit for sale. Over time, a wood block pallet will also likely lose its original geometry and weight, impairing the efficiencies of highly automated manufacturing and warehousing systems.
  • Debris in the Warehouse: When a wood pallet is damaged, wood pieces (sometimes large chunks), splinters, sawdust, and nails are left behind. These can cause foreign object contamination in food products, or they can accumulate in work areas, making it more difficult to keep the warehouse clean and creating a safety hazard for employees and equipment.
  • Unhygienic: A wood pallet cannot be easily washed or sanitized. Although they are sometimes heated-treated in a kiln before being shipped out, wood pallets are not cleaned often or at all once they’re deployed in the supply chain. As a result, a wood pallet can easily act as a vector for the contamination of products or production areas.
  • Variability: Wood block pallets are subject to a great deal of variation. The wood used in the pallets may have different grains and densities. It can also absorb moisture, which changes the pallet’s weight and tightens the margin of error for loads that weigh out.
  • Retailer Rejection: Many of the above disadvantages also play a role in retailer rejection. A pallet that has caused product damage or has contaminated product will be rejected, for instance. But a load shipped on a wood pallet is in general more likely to be rejected by a retailer–sometimes for minor issues–than a pallet made from an alternative material like plastic.

The Ultimate Pooled Platform? Plastic Pallets

Cost-effective pallet managementIn today’s world of tightening quality standards, where profit margins depend on maximizing efficiency, issues with wood pallets can seriously affect a company’s earnings. Fortunately, there is an alternative. Plastic pallets are non-absorbent engineered shipping platforms that meet the same GMA specifications wood pallets do. They are also sturdier, without variations in weight and dimensions that can throw off shipping margins and cause issues in supply chain automation. A plastic pallet’s smooth, nonabsorbent surface makes it easy to clean between uses, and its durability means it won’t splinter or leave behind debris. The advantages of plastic pallet pooling over wood are such that many major retailers are pushing their vendors to make the switch to the shipping platform of the future.

However, two things have typically prevented companies from making use of plastic pallets in their supply chains:

  • The expense of plastic pallets
  • The investment of traditional pallet pools in wood

In order to enjoy the advantages of plastic pallets, companies have needed to procure and manage their own stock of plastic pallets–a big undertaking that brings with it all the challenges and drawbacks discussed above. But that is no longer the case. Plastic pallet pooling providers like iGPS specialize in providing companies of any size with a reliable pooled plastic pallet at economic rates, meaningfully driving down Total Cost of Business and removing complexity from your business.

The iGPS pallet pool combines the advantages of pallet pooling with the durability and superiority of a high-quality plastic pallet. To switch to a shipping platform that your retail partners will love, give our team a call at 1-800-884-0225, email a specialist at switch@igps.net, or visit our contact page.