Are your pallet partners cheating on you? (page 2)

-- Logistics Management, 2/1/2005

Page 2 of 3

Once you're ready to launch a pallet control program, you'll need to make clear to every party that touches your pallets—including your carrier, public warehouse partner, and third-party logistics provider—what they are accountable for, says Junkin. A written pallet policy or letter of agreement is a good way to clearly spell out who is accountable and what triggers that accountability. For example, it might state that once the pallet moves off your dock and onto your carrier's trailer, the carrier is now accountable for the pallets. Such agreements also typically cover pallet specifications and quality; how pallets are returned, tracked, and accounted for; and how to handle rejected pallets.

Pallet control agreements needn't be overly complex. In fact, Junkin says she's seen some successful policies that are only a few paragraphs long. They should, however, be consistent with your other business practices, such as how you deal with shortages, damages, unpaid product, or customer deductions, she suggests. (See "Pallet Policy Pitfalls," at left.) Finally, because a pallet partnership (like any relationship) can change over time, Junkin recommends conducting an annual review of your policy.

Electronic enforcement

Enforcing a pallet policy requires both internal and external pallet monitoring and tracking. To make that work, you'll need to establish a disciplined set of procedures centered on either an electronic or a paper-based ledger system.

Electronic (typically Internet-based) ledger systems provide a common database where all parties—suppliers, distributors, customers, and carriers—can enter information about how many pallets were delivered, received, and sent back. These systems notify participants if there are any exceptions, and they provide visibility into that information.

Online ledgers, moreover, can cut down on administrative cost and time. "No human should do this job," says Victor Cheng, president of technology provider iLogic. "It would involve looking through 10,000 to 20,000 shipments and figuring out what the exceptions were, and then calling up your partner and yelling at each other. This is not a good way to use your employees' time."

With today's technology, Cheng explains, instead of taking a day-and-a-half to identify exceptions, it can take just 30 seconds. And instead of sending out paper ledgers by mail to pallet partners, exceptions can be resolved through e-mail.

There are many ways to acquire pallet tracking technology. Several pallet management companies, such as Ongweoweh and First Alliance, provide a pallet tracking system to their customers, and iLogic can design a system for single-company pools. Some pallet manufacturers, such as ORBIS, are starting to offer pallet management and tracking services to some of their customers. In Canada, the CPC provides a pallet tracking system to its members. Many shippers, moreover, choose to work with a pallet rental company such as CHEP because the rental company will track and administer pallets for them.

While the new Web-based tools certainly reduce the administrative burden associated with pallet tracking, old-fashioned paper-based methods can still be effective, Richardson says. Paper-based systems should include a ledger for each customer that clearly shows how many pallets went out to them and how many came in. Richardson also strongly recommends including a separate area for verifying pallet receipts with its own signature line on shipping documents. "Otherwise the customer can say, 'I signed for the [product], not the pallet,' " he warns.

The problem with a paper-based system, though, is that regardless of how good your own records are, you have to depend on your partner's records. "Even if you have an excellent pallet control system, your partner might not," says Cheng. "Your ledger might say that they owe you 1,000 pallets, but if your partner has a poor pallet control system, they might not necessarily give them to you. It can be very confrontational." Continued...

Previous 1 2 3 Next