Managing a pallet fleet can be a logistical nightmare for supply chain and warehouse managers. Along with finding storage space for empty platforms, they also have to handle issues with cleaning, repairing, and retrieving pallets. These tasks use time and money that could be better spent generating revenue through deliveries of saleable products. This is part of the reason pallet exchange programs were developed. A pallet exchange contract requires receivers to exchange an empty pallet for each loaded pallet they receive.
Pallet exchange programs are now an outdated business model in today’s high-volume environments where demand can change rapidly. Many managers who need more options and greater flexibility have found alternatives to pallet exchange programs through services such as pallet pooling.
What Is a Pallet Exchange Program?
A pallet exchange program is a collective agreement between pallet shippers and receivers that tries to ensure that each party maintains the same number of pallets. When loaded pallets are brought to a warehouse or another receiver, they are exchanged for an equal number of empty pallets. Typically, a receiver will have exchange agreements with several suppliers to ensure there are enough pallets to go around. All pallets exchanged must be documented thoroughly to manage such a program.
A pallet exchange program doesn’t offer the flexibility to increase or decrease the pallet supply on short notice.
Before pallet exchange programs, a shipper would often wait until its pallets were emptied and returned or choose single-use platforms. Both options were expensive and time-consuming. Pallet exchanges acted as a viable alternative. However, these agreements are less popular than they once were, in large part because of the following drawbacks:
- Limited quality control: Empty pallets are often exchanged in stacks and, while pallet exchange contracts generally specify that pallets be in usable condition, there is no guarantee that every pallet received will be acceptable. Manufacturers must inspect each pallet to limit the risk of taking broken or unsuitable platforms.
- Hygiene: Either party in the exchange may receive pallets that have been exposed to spills, pests, and other contaminants. As a result, they may need to complete their own cleaning process before use.
- Scalability: A pallet exchange program doesn’t offer the flexibility to increase or decrease the pallet supply on short notice. The receiver must provide the same number of empty pallets to the shipper as the number of loaded pallets they receive. This can create challenges during periods of high demand in which extra pallets are required. It can also be problematic for warehouses with limited space, as they must store excess pallets during periods of low demand.
While pallet exchange programs minimize some problems for managers, they can also create a hassle for many involved. In some cases, shippers may not be aware that a manufacturer or receiver has a pallet exchange program in effect, which can result in a fee if they are unable to provide empty pallets in exchange for loaded ones, or could result in the shipper being forced to unexpectedly provide trailer space to stacks of empty platforms. And, despite the apparent simplicity of the pallet exchange system, properly balancing pallet ledgers can be maddening. This is made more complex by the fact that pallets are sometimes rejected due to poor condition, and this may go unrecorded.
The failures of the pallet exchange process are part of the reason behind the popularity of pallet rental programs, also known as pallet pooling. The pallet pooling model minimizes the hassle of pallet management and ensures an appropriate and flexible supply of pallets.
Why Choose a Pallet Rental Program?
The pallet pooling model relies on a pallet rental company that specializes in pallet supply and management. While programs vary, most follow several standard steps.
- Order: The supply chain manager submits a request to the pallet pooler for the number of pallets they need.
- Use: Pallets are received at the warehouse, distribution center, or manufacturer and loaded with product.
- Pickup: After the pallets reach the end of the supply chain, the pooling company arranges for retrieval.
- Clean and sort: If necessary, the pooling company inspects, cleans, and repairs pallets.
- Return to pool: Pallets are returned to the pool for their next use.
This model eliminates much of the hassle of the pallet exchange program by putting the onus of pallet care on the pallet management company. Pallet pooling releases supply chain managers from the responsibility of transporting pallets for cleaning or repair. It’s also a more sustainable option because it streamlines pallet transportation by taking advantage of the pooling provider’s network of customers to move pallets as needed in the most efficient way possible.
A pallet rental program offers a scalable supply of pallets and eliminates much of the hassle of fleet management and pallet exchange.
There is another clear advantage to the pallet pooling model: scalability. A pallet rental program lets the shipper request more or fewer pallets according to demand at any given time. This eliminates the need to hold onto an overflow pool of pallets for peak demand periods, freeing up storage space in the facility.
Most supply chain managers will find that the standard pallet exchange program has more than a few fatal flaws. A pallet rental program, on the other hand, offers a scalable supply of pallets and eliminates much of the hassle of fleet management and pallet exchange while saving time and money. A pallet pooling provider that specializes in lightweight, durable, and recyclable plastic pallets instead of traditional wood ones takes pooling one step further, making it more hygienic, sustainable, and cost-effective.
Renting iGPS plastic pallets offers a flexible, easy pallet solution superior to standard pallet exchange programs. For more details on working with us, call 1-866-636-6443, email a specialist at [email protected], or visit our contact page.