Pallets are a large umbrella term for physical containers used for the transportation of goods in a logistics supply chain.
A pallet can be of any size, shape or material, based on the requirement and sector using them to transport goods. Pallets can represent a sizable investment by a company in operating assets that have enough real, intrinsic, regulatory or strategic value to warrant tracking.
While we are in the 4th and 5th generation of supply chain execution systems for warehouse management – very few software systems have focused on the management and tracking of the pallets themselves.
Pallets are also inherently assets as they carry the goods and need to be tracked and managed efficiently. Over the last few years, the growth of a new dimension in supply chain execution software has occurred – pallet management systems.
Pallet management systems have created the drive to environmentally friendly, returnable packaging and the increasing acceptance of software for the management of assets as enabled by the Internet.
The net result is a robust real-time system for the tracking and management of pallets and other returnable containers. The direct benefit of these systems is increased operational efficiency and cost reduction.
A Quick Background Into Pallet Management Digitization
Pallet management is a physical service and has not been one that is technology-focused.
The advent of supply chain solutions for warehousing and transportation to increase supply chain efficiency and the need to gain more visibility and control over the management of the assets used to transport goods has forced pallet management systems to now come to the forefront.
High Value
Pallets that are tracked through a pallet management system generally have a higher value. This may be actually based on the material of the pallet (top end plastic or steel pallets) or, alternatively, the pallet may be of low value but has high-value goods.
Pallets may also have high strategic value where the value of the pallet and its contents in the supply chain process is critical.
For example, an automotive parts pallet may hold low-cost blue widgets but if that pallet does not reach the production line and the line must be stopped the strategic value of that pallet soars as do the penalties to the supplier.
Identification and tracking of individual pallets and their contents remain a salient requirement to protect investment, comply with government regulations and provide the levels of customer service demanded of companies in today’s competitive environment.
Mobility
The “mobility” of pallets introduces issues central to effective pallet management. These issues have been the historical gating factor to the introduction and economic deployment of pallet management systems in the past.
Difficult Identification
To uniquely track the pallet itself some form of Automatic Identification or AutoID (barcode, RFID, etc.) must be affixed to the pallet.
The movement of products on a pallet in a warehouse can be easily captured using barcode scanning of barcodes attached to items or cases on the pallet itself. However, barcodes have proved unreliable due to environmental and usage issues. Furthermore, barcodes on a pallet or other container may be highly inaccessible.
New technologies, like RFID, have been introduced to deal specifically with mobile assets. RFID, as a replacement for barcodes or other forms of AutoID, has clear advantages.
Environmentally, RFID can withstand extremes in temperature, water emersion, etc. that barcodes cannot. They can also be easily integrated within the pallet to preclude “wear” issues.
From a usage standpoint, RFID supports indirect, i.e. not line of sight scanning and can be read up to distances of 300 feet or more. This allows for the elimination of labor in the processing of pallets making the process more reliable and also quicker.
Difficult Data Capture
Capturing pallet IDs and data regarding pallets is often a difficult task due to their mobility and more importantly, capturing data in a cost-effective manner is more challenging. “Line of sight” is required to scan a pallet ID with barcodes and manual data entry to a fixed or portable data terminal is required to input “more” than just a pallet ID, e.g. status, pallet condition, etc.
This implies that operators have to access an individual pallet, scan it and then capture data on a mobile terminal. With RFID, data can be read into a tag and stored with the RFID tag or transient locations.
Difficulty in Location Tracking
Pallets generally move through and ‘live’ in various different locations. This creates an issue in tracking and managing pallets.
While a warehouse management system provides the location and details of pallets within the confined walls of that warehouse and possibly the trunk yard – the system does not account for the real-time movement of the pallet between locations.
Pallet management systems also factor in the ‘real-world’ movement of the pallets – providing low-cost, location data collection to “feed” the pallet location database of the pallet management system.
The complexity of Supply Chain Operations
The handling of pallets in a global network over time has become more complex; time zones, geographical locations, third party handlers, multiple control systems, import/export documentation, mandatory schedules, multiple handling points, size of transaction data, need for history (trend and traceability) are all factors in complexity. The effective management of pallets requires the efficient integration of both physical services and digital systems.
What is a Pallet Management System?
Pallet Management Systems are a new grandeur of supply chain execution (SCE) software that go beyond the traditional pallet accounting applications of the past.
Pallet management systems are a key component of any supply chain management solutions platform within “pallet-intensive” industries.
Pallet management systems are derived from 4 key components:
Advancements in Automated Identification and Data Collection (AIDC)
Passive and active Radio Frequency Identification (RFID) technologies, allow for efficient and/or “hands-free” asset identification and tracking. Advances in RFID production technology and better “packaging” of the tags themselves have resulted in lower RFID tag costs enabling the deployment of RFID systems.
This combined with wireless mobile data communication, e.g. WLAN/WAN/WAP, for the real-time capture of pallet IDs and pallet data has improved the basic element of data collection hereto unachievable.
Widespread acceptance and deployment of supply chain execution solutions
As more “asset-intensive” companies install warehouse, transportation, and other supply chain management systems, the desire to track assets beyond the four walls of the warehouse has been growing.
For example, grocery retailers can use pallet management systems, as an extension of their warehouse management systems, to track pallets of products into the store from the distribution center.
A distribution center shipped a product to a store and it was returned to the same distribution center.
The movement to returnable packaging and leasing programs
As firms look to reduce the cost of disposable packaging, e.g. wood pallets, in their supply chains or in response to environmental regulations, many are moving to returnable packaging (RTP).
This typically requires a large initial capital and with this comes the need to control and secure this investment. Regardless of the type of container “package”, the need to identify the asset and contents is essential to achieve seamless control of the supply chain logistics and pallet management systems to meet this need.
The Internet
All of these issues are underpinned by the ease of global data distribution through the use of virtual private networks and the Internet.
With the widespread acceptance of supply chain execution systems software, data collected from a pallet management solution can now be integrated and used more effectively within total supply chain process management to increase the efficiency of asset delivery and reverse logistics systems leading to improved utilization.
As the low-cost medium for the movement of data, the issue of pallet management in complex logistics networks is reduced.
Functions of A Pallet Management System?
Inbound
Pallet Receiving – Empty pallets may be received into the system, creating available pallet inventory.
Repair and Maintenance – Damaged or out-of-date assets, e.g. end of life cycle, may be identified and directed to repair or recycling locations.
Putaway – Empty, usable assets may be moved to storage locations.
Outbound
Picking
Shipping
General
Pallet Inventory Management
Pallet Location Management
Pallet/Content Tracking
RFID / Barcode Integration – In executing these features and functions, pallet management systems will utilize a variety of mobile and potentially fixed-point data collection devices. Fixed data input may occur through batch or real-time portable data terminals (PDTs) or other data capture and display devices.
Security
How do Pallet Management Systems Impact Supply Chain Efficiency?
The benefit of pallet management systems in achieving higher levels of supply chain efficiency is recognized through;
Increased Asset Utilization
Management and tracking of pallets improve the availability of pallets while reducing the downtime in the pallet usage life cycle.
Pallet management systems provide critical information that helps execute advanced decision-making for good on the move, enabling improved supply chain process management (SCPM) thereby saving time or dollars.
Combined with industry pooling, utilization is a major cost reduction driver. While pallet management systems can optimize an individual company’s supply chain, pooling optimizes the total industry. Pooling is primarily achieved in industries with high levels of ‘true’ asset standardization and competition is derived not from logistics advantage but product or marketing related concerns.
Improved Capital Deployment
One of the fundamental problems with pallets is that they can be expensive. Pallet purchase and subsequent depreciation have a significant effect on cash flow, the balance sheet and P&L.
Growing market demand for RTP is forcing substantial capital investment in plastic or other “non-wood” pallets. Protecting this investment and minimizing ongoing investing is a key ROI element of pallet systems.
Content Loss Reduction/Expiration
A major benefit of pallet management systems is the prevention of content loss in addition to asset loss (pallets). Content loss through theft, mishandling or expiration can be considerable. For the shipment of high-value items such as pharmaceuticals, the use of sealable plastic pallet boxes is common.
Reducing the identification of contents (through the use of RFID or barcodes) combined with security devices and effective cycle tracking is very important.
Maintenance and Repair Cost Reduction
Last but not the least, pallet management systems support the identification of required preventative repair as well as the status control of damaged assets.