Thursday 27th Oct 2016 - Logistics Manager

Setting the standards

As globalisation marches on, we are increasingly comfortable carrying out business activities without the concern of national boundaries. Yet, although widening the scope of opportunities and opening up new horizons, the international marketplace does throw up challenges. One of these is the relentless call for standardisation, be it of railway gauges, health and safety levels, waste management. The list is endless.

Standardisation in any market enables businesses to compete on a more level-playing field. So why aren’t more areas of commerce taking the gauntlet to reach the holy grail of standardisation? In the fast moving consumer goods (FMCG) pallet sector, standardisation would provide several benefits to all – pallet provider, manufacturer, 3PL and retailer.

Standardisation can assist any industry if applied correctly and to such a diverse sector as the FMCG market, even a modicum of standardisation would help bring a potentially unwieldy supply chain back on an even keel.

With perishable and non-perishable, liquid and solid, bulky and lightweight, fragile and non-fragile goods all being transported through the supply chain to end up on the same supermarket shelves, the difference between goods and therefore transport requirements is immense.

In terms of current pallet options to cater for such a diverse product range, the choice is already significant and is continuing to grow. For example, the soft drinks industry has introduced a pallet that flows all the way through the supply chain right to the shop floor – a clear demonstration of a sector within FMCG creating its own standards.

The soft drinks market is not alone as other sectors are seeing an increasing number of ‘tailor-made’ plastic pallets, with differing characteristics – depending on the product being transported – entering the supply chain.

The ideal would be to only manufacture plastic pallets to a ‘standard’ property density and size. However, to match needs with standardisation the higher specification of plastic pallets, and therefore the more expensive, would be required. Indeed, the same scenario has occurred for the wooden pallet too.

With increasing automation in both the retailer’s and FMCG manufacturer’s facilities, a higher quality pallet is needed to ensure the smooth running of the supply chain, striking a balance between cost and robustness. In turn, the standard pallet will reduce the potential pallet damage, facilitate the ease of movement through the supply chain and reduce the amount of administration in terms of differing pallet properties required for different products.

Furthermore, standardisation of pallets facilitates pallet pooling and a pool operator can bring economies of scale relating to both logistics and pool maintenance.

There is no doubt that standardisation in the UK FMCG market takes cost out of the supply chain. However, the major rub is the volume of pallets in the UK and European supply chain at any one time. With millions of individual pallets currently flowing throughout Europe – there are at least four major and very different specifications of pallets – the chance of standardisation across the European FMCG sector is remote even before the discussion has started.

Similarly, in rail transport each territory has created its own standard railway gauge. Granted, the international supply chain would operate more smoothly with standard railways gauges but in reality, the will and available funds from the market and government bodies means it is not an option for the foreseeable future.

However, where we can learn from this rail example is how the industry is adapting its operations to suit varying facilities across the Continent. Rail top loaders, as well as a general increase in the use of intermodal operations, are ensuring that some, albeit not all, of a trans-European freight journey can be undertaken via rail, at reasonable cost – in fact intermodal solutions are invariably more effective.

So, where does all this leave pallet size standardisation? We know it is our eventual destination, as it will assist the flow of international commerce. Nevertheless, we have to be pragmatic about the realities of the situation. Standardisation is good but it can only go so far.

A major move in the right direction would be to halt the introduction of yet more pallet sizes and properties. This is increasingly pertinent as waste packaging, sustainable packaging and overall environmental legislation become more stringent. The way pallets are used and the materials used in their manufacture all need to be considered as part of the slow but sure move to pallet standardisation. n

Jane Gorick is general manager of pallet pooling service LPR.