FALLS CHURCH, Va. -- There is little agreement on the expenses involved in the various pallet programs, according to a recent study on pallet costs and practices conducted for the Efficient Foodservice Response project.
. The report, titled, "Assessing Pallet Costs in Foodservice," includes selected average company costs associated with current platforms, along with templates for evaluating a company's pallet costs.
Sponsors of the Efficient Foodservice Response project include the International Foodservice Distributors Association, the International Foodservice Manufacturers Association, the Uniform Code Council and the Grocery Manufacturers of America.
The pallet challenge faced by foodservice companies is much the same as that in the supermarket industry, noted industry observers. The report is based on the responses of 112 foodservice companies and presents the recommendations of the EFR Pallet Subcommittee. The four recommendations included in the report are:
Improve pallet pool quality by having full and open disclosure between individual trading partners about issues and practices relevant to the cost of shipping platforms in foodservice distribution in order to improve pallet pool quality for the industry.
Adopt industry self-regulation program, which could include these elements: adherence to pallet specifications for new, used and repaired platforms; enforcement of system-wide accountability; removal of severely damaged and substandard pallets; use of environmentally sound disposal for all discarded shipping platforms; standardization of handling practices.
Adopt voluntary published guidelines. Adhere to the engineering specifications developed for the construction of wooden pallets and adopted by the retail food industry, as appropriate guidelines for foodservice pallets.
Determine the most cost-effective platforms for the total supply chain, and include the implications for motor carriers and other third-party logistics providers, such as consolidators, during discussions of overall supply chain improvements.
"When comparing costs between trading partners, it is important to consider the total system costs and the cost implications to the total system for any changes being contemplated by either or both partners," the report said. "The total system costs include third-party service providers such as motor carriers and public warehouse operators."
Among the key findings of the study, the standard 40-by-48 inch pallet is more prevalent in foodservice distribution than the Pallet Subcommittee had thought prior to the survey. The overwhelming majority -- 98% -- of manufacturers responding to the survey reported using these full-size platforms, also known as "GMA" or "retail" pallets, and they spend an average of $1.4 million annually on them. Foodservice distributors tend to use the 40-by-48 inch pallets for shipping and receiving but also reported using smaller-sized and plastic pallets. They spend an average $114,300 a year on the standard pallets.
More than half, or 51%, of the manufacturer respondents rank one-way pallets as the most expensive and third-party pallets as next most expensive. According to 14% of respondents, pallet exchange is the most costly. The distributor respondents were divided on whether pallet exchange or third-party pallets are more costly. Pallet inventory control is the most challenging aspect of managing shipping platforms, reported the manufacturer respondents, while pallet quality is the biggest challenge cited by the distributor respondents.
The report's self-evaluation templates cover the physical, financial, productivity and administration cost centers for shipping platforms. The report also provides information on general performance comparisons of typical pallet designs, and the specifications for grocery industry shipping platform performance, first published in 1992 by the Joint Industry Shipping Container Committee Pallet Subcommittee.