For the supply chain, which consists of pallets, crates, and containers, to function smoothly, optimal supply and efficient pallet management systems are needed. For large volumes of returnable transport packaging (RTP), a comprehensive and efficient system is crucial for tracking and monitoring the entire supply chain from a single platform. Pallet management systems, such as those for Loscam or CHEP pallets, can result in faster transit times, better resource utilisation, better life-cycle management, and overall cost savings. This blog discusses the importance of a pallet management system, highlighting potential causes of overstocking in returnable pallets, the cost of stocking reusable containers and pallets, and its potential to enhance supply chain efficiency.
Table of Contents:
What exactly is a pallet management system?
Pallet management systems, sometimes referred to as software, are essentially applications that help you optimise your supply chain’s efficiency. Pallet management software can help you optimise your supply chain not only in terms of cost but also in terms of creating an efficient and continuous supply chain. Pallet management software can digitise various aspects of your supply chain, such as tracking and monitoring RTP transportation, automating pallet counting, and monitoring the speed at which RTP moves throughout the supply chain.
What are the possible causes of overstocking in returnable pallets?
Shortages create premeditated fear. Fear of running out is one of many factors that contribute to RTP, crates, pallets, and container overstocking. Here are several more reasons:
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Offsetting of warehouse inventory
When inventory is produced and warehoused in a reusable supply chain, such as pallets or containers, anything in use is an asset effectively removed from circulation and must be offset. Pallets and crates must be rotated regularly to prevent paying a high holding fee, so this is a concern for those who are part of an RTP supply chain asset pool.
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Dealing with Split loads
A split load occurs when a single shipment is divided into smaller loads that are bound for different destinations. As a result, more supply chain assets will be needed in the future to handle the loads.
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Buffer stocks
To compensate for any shortcomings, a buffer of RTP containers becomes critical. You lose out if you receive a shipment and have enough containers to keep the goods moving. For many people, having a buffer stock is invaluable.
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Absence of automation
A lot of supply chains are handled manually, which results in inefficiency. This leads to inaccuracies in the counting of incoming and departing pallets and creates pressure to hold inventory. Even though there isn’t a completely automated leakproof solution that can handle every straightforward task in the supply chain with ease, some overstocking tendencies can be resolved and reduced with improved visibility into things like RTP movement, location, pick-up, drop, and automated counting. At this point, thinking about integrating a pallet control system into your supply chain is crucial.
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Urgent need to match production schedules.
When you don’t have pallets or crates to transport your goods, your entire production line can suffer. For example, if you are a car manufacturer and are producing specific parts that must be transported, without enough containers, you will have excess parts in production if previously manufactured parts are not transported to their final destination.
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Changes on the demand side
FMCG and agriculture have relatively consistent throughputs, whereas automotive spares, commodity goods, and textiles may not be able to move their goods as quickly or predictably. Another way that some RTPs, such as crates and pallets, are held up or taken out of circulation is when the packaging is used as display cases. Such RTP would only re-enter the supply chain once their purpose as a display item was fulfilled or the product was depleted in the container.
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Reverse logistics delays.
When a supply chain is not well managed, pallet recovery can be time-consuming. You may not keep track of pickup and drop-off locations, how many pallets are loaded and unloaded, how many are damaged, or how many are returned to you.
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Inventory that is misplaced or lost
RTP is frequently lost, misplaced, and damaged. It is difficult to consistently identify and repair leaks in a complex supply chain. This encourages suppliers to overstock because they may not have complete visibility into their supply chain.
What cost consists of stockpiling reusable containers and pallets?
- Paying for standby
Any added stock as a buffer may or may not be used in your supply chain; in either case, you must account for the incoming and outgoing shipment charges.
- Increased warehousing and storage costs.
Every square foot of warehouse or storage space costs money. You will need to invest additional funds for extra pallets and containers introduced into the supply chain as a buffer.
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Increased rental fees
If you are going to introduce extra stock into your supply chain, it is fairly simple: you will require additional space to store the containers you are stockpiling.
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It increased working capital.
As you increase your investment to build the buffer stock, you will need to account for more working capital.
How can a pallet management system maximise supply chain efficiency?
Manual recording of supply chain management procedures can make it difficult to ensure efficient logging and information sharing. Poorly managed supply chains can lead to negative impacts on the bottom line and reduce surplus and waste. Here’s how a pallet management system helps:
- Pallet and container management systems can streamline inventory and reduce losses.
- Having visibility of the supply chain on a single digital platform improves efficiency.
- Including Loscam and CHEP pallet sizes and dimensions, pallet management software provides quicker, more precise, and reliable inventory visibility.
- These systems can reduce returnable supply chain asset shrinkage by over half and safety stock by a third.
- Investing in pallets and container management software can improve management efficiency and traceability and prevent overstocking or overuse of buffers.
Conclusion
Overstocking returnable pallets and containers can lead to inefficiencies, increased costs, and logistical challenges in the supply chain. Pallet management systems improve visibility, automation, and control of supply chain assets, reducing shrinkage and optimising resource utilization. It will take into account every aspect of the pallet, including the Loscam and CHEP pallet dimensions and other size details. However, many professionals still use outdated methods, making modern systems a crucial option towards optimisation.