Professionally managed pallet programs yield cost savings, transparency and optimization now, while positioning pallet users for the future.
Such programs increase the value of every dollar spent in multiple ways. While each is tailored to the customer’s individual needs and operating environment, all share the benefit of direct cost savings.
A well-planned and executed pallet program provides increased value in two major ways: transparency and optimization.
Transparency. Information, goals, and execution must all be transparent. Commodity buyers typically name pallets as among the most difficult product categories to manage. Complicated questions arise: Why did pallet prices rise in the east this quarter? What’s driving the market price? Are we using the best design? What have we done to improve? Why don’t we have clear data on pallets like we do for other raw materials?
A well-developed pallet program provides the transparency necessary for those questions to be answered. The current environment can be documented, allowing for the tracking of changes and measurement of progress. The program manager can personally verify and record pallet specifications at all locations, as well as service requirements, ordering processes, and all interactions between pallets and products. Opportunities for improvement can documented, along with estimates of cost savings, increased efficiency, and long-term value potential. Well-developed pallet programs also provide customized reports with spend information. Market updates and lumber data can be reviewed and shared regularly. Having such comprehensive information at your fingertips means the program manager can make data-driven business decisions.
Optimization. A successful pallet program relies on users’ ability to optimize physical pallet design, sourcing plans, and the way in which pallets interact with the greater supply chain. Pallets are a pivotal point in the chain, and should be considered a strategic purchase. Companies strive for maximum value out of each dollar spent. This might include changing a design to better align with local lumber opportunities, investing $10,000 in a conveyance line to unlock $50,000 of annual savings in pallet spend, or partnering with suppliers that can best provide for material and business needs.
The ability to generate ideas is only half the battle. To maximize success, you need to produce a plan, identify potential trouble spots ahead of time, and build a relationship with operators encountered in the process of baselining. An effective pallet program manager will have this entire process in mind from the first meeting. Backed by a team of technical experts, that individual can help to discover and execute new opportunities, face challenges, and deliver results.
A well-planned, executed, and managed corporate pallet program allows companies to react quickly to disruptions and capture opportunities. Modern-day business strategies must adjust to new trends at a continually faster pace. Major supply-chain disruptions seem more frequent than ever before, and can have a devastating impact on operations. For example, during the Chilean earthquake of 2010, global paper pulp supplies were disrupted, U.S. paper mills shifted into high gear, and hardwood disappeared from the Eastern Texas pallet market. During the current global pandemic, program managers have been monitoring the health of pallet manufacturers, and instituting no-touch delivery processes to help guard the pallet supply chain and the individuals who support it.
Not all change is disruptive. Sometimes change comes as a great opportunity. For example, wooden pallets enabled by the internet of things can now participate in the planning of supply chains of the future. The capturing of such an opportunity requires extensive knowledge of the pallet supply chain. Companies need a pallet program manager to coordinate and execute such efforts. Imagine being able to document the reduction of wood use across all sites, or aggregating pallet information to engage in predictive analytics.
Tomorrow will bring the need to react to factors we haven’t even considered. Nevertheless, we can prepare our pallet spend and supply for change and disruption. With an effective pallet program, companies can position themselves strategically for the future, while saving money in the present.
Tyson Steffens is a Principal with The Pallet Alliance.
Timely, incisive articles delivered directly to your inbox.