Often Pallets and Foldable Containers fall on the responsibility of the logistics, packaging or even raw material procurement manager and at first glance, the commodity appears to have a low focus despite proving to be a substantial percentage share of the spend analysis of some companies.
On March 22nd 2018, Elemica focused customer attention on these commodities and held a round table in Amsterdam with companies Akzo Nobel, DSM, Solvay, TNT, and Vion participating and exchanging their views on how to source Pallets and Foldable Containers.
The discussion was on the following three topics:
- Market Knowledge Refresh for Pallets, Foldable Containers and Pallet Pooling.
- Sourcing Methodology, Key Players and Cost Models.
- Impact of the circular economy for Lean, Agile and Green procurement.
A broad overview of the Pallets, Foldable Containers and Pallet Pooling markets showing the trend per region, per product material and per sector highlighted the importance of
the pallet market being higher than the pooling and Foldable Containers market by 98% and 99% respectively.
While material prevalence for Pallets is wood, metal for Foldable Containers and plastic for Pallet Pooling, it is also interesting to see these patterns slightly evolve as well as the method to manage the commodities going from self-managed towards third party managed.
From the present trend, should we conclude that pooling will slowly replace the in-house management of Pallets and Foldable Containers? It has been one of the points of debate among the participants looking at their past and present practices.
Sourcing Methodology and Key Players
From the discussion, the inventory of Pallets and Foldable Containers reflects the specific needs per location, and one of the key challenges highlighted resides in harmonizing specifications across multiple sites. Then comes the key question should the Pallets or Foldable Containers be purchased, rented or externalised via a pooling concept or even using the services of a packaging integrator?
Confronted by complex set-up and multiple parameters such as the Lanes, Frequency, Volume (Quantity needed), Transport time, Loading/unloading time, stand by time (before loading/unloading), Repair, Wash, RFID for trackability, or Pool Management, from which costs are drawn, a thorough analysis should be performed to define the best financial solution that is comparable with the present spend.
At this point if a Pallet is not anymore one-way usage, the Buyer will consider, not a price per pallet, but a price per cycle ultimately changing the total picture.
Finally, another element will be considered is, should the upcoming strategy be deployed on the entire company, in niches or on geographical territories?
Such in-depth study becomes necessary as often sourcing these commodities reveals low attention and reduplication of a present approach continues among a large scope of key players.
Elemica’s knowledge and expertise on this matter can add value by helping customers to better understand their present strategy and foresee substantial derived savings.
Impact of the Circular Economy in a final choice
Should pooling be the best option? It can add extra benefits in the final choice when considering the ecological approach and impact of CO² generation on the planet.
Pooling maps the merge of “Agile & Lean Procurement” with “Green Procurement”, an aspect today that companies are paying more attention to and is highly valued amongst the participants in our Round Table discussion.
Would plastic pallets be preferred over wood when set in a pool? This was a major question posed by the participants when considering the ecological aspect of Pallet Pooling.
To answer this question, a study case was considered, setting hypothesis but ideally it should be set for each type of organisation and Elemica can support in this activity.
To conclude, participants came to view that talking about a pallet or a pallet container box unit price has less sense compared with a CONCEPT focusing on;
- Evaluating the lowest pallet/foldable container cost per cycle.
- Measuring CO² impact and/or savings of your concept.
- Balancing both for the upmost benefits.
Are you engaged in this approach? Do you also want to embrace the challenges of an Agile, Lean and Green procurement strategy to help your company shine with best in class procurement? Then please contact:
Evelyne Lachal ( Evelyne.email@example.com) for more in-depth information.