Pallets & Returnable Packaging Management — The Ultimate Guide
What Are Pallets & RSAs?
Returnable shipping assets (RSAs) are specialized reusable durable packaging containers such as crates, totes, and cages as well as load carriers such as pallets, dollies, and shipping containers that are used to help package and transport your goods safely. Some types of dunnage — items used to tether, pad, or otherwise protect packages and shipments — are also classified as returnable/reusable packaging items.
Commonly Used Reusable Transport Items
- Reusable Durable Secondary Packaging
- Intermediate Bulk Containers (IBCs)
- Reusable Load Carriers
- Reusable Plastic Containers (RPCs)
Regardless of category, returnable containers are any supply chain items in a shipment that are designed to be reused, preferably for its original purpose, within a supply chain.
Acronyms Used to Denote Pallets
Returnable supply chain assets are also commonly known as “reusables”, or any of the following terms:
- Reusable Shipping Assets
- Reusable Supply Chain Assets
- Returnable Shipping Assets
- Returnable Supply Chain Assets
- Reusable Transport Items
- Returnable Transport Items
- Reusable Transport Packaging
- Returnable Transport Packaging
Returnable Containers – The Scale of Use
There are easily over a billion Reusable Shipping Items (RTIs) like pallets and crates in circulation globally, and most of them aren’t easy on a supply chain’s budget.
While single-use corrugated containers could cost as little as $20, most reusable transport items — also known as Reusable Shipping Assets (RSAs) — cost between $200-$5000 per unit, depending on the industry, use, and customization. Their purchase, and subsequent depreciation, have a significant effect on a company’s cash flow and balance sheet.
The high capital costs of ownership are why most companies opt to rent or pool their pallets, containers, or other reusable shipping items and supply chain assets. If you are a multinational however, chances are you are renting.
Why Is Returnable Packaging Catching on?
Dozens of industries are switching over from expendable, one-way packaging to reusable packaging options in their supply chain to optimize operations and get on board the sustainable bandwagon.
There are several benefits to using reusable/returnable packaging options, some of which include:
- Reducing overall supply chain packaging costs.
- Redcing waste, making supply chains greener.
- Improving efficiency and productivity through better shipment handling.
- Lowering processing and labor costs, improving competitiveness.
- Better product protection, reduced product damage.
- Greater shipment shelf-life and storage resilience.
- Ability to ship Less than Load (LTL) with minimal dunnage.
- Reduced shipping asset inventory and purchase spends.
- Improved ergonomics and safety features for your workforce.
- Fuel cost savings through the use of lighter shipping assets and lesser dunnage.
Which Industries Most Commonly Use Reusable Packaging?
Reusable packaging is prevalent in several industries and sectors, some of which include:
- Manufacturing (automotive, electronics, electrical, pharmaceutical, chemicals, etc.)
- Food & beverage production and processing (agriculture and produce, meat and poultry, baked goods, dairy, processed foods, fast-food chains, etc.)
- Consumer and retail product distribution (grocers, stores, healthcare institutions and pharmacies, supermarkets, etc.)
What Is Pallet Management and Its Challenges?
Although there are plenty of advantages to using reusable transport items, there are also a few concerns that hamper their widespread adoption across global supply chains. Some are challenges that crop up due to the inherent nature of these returnable shipping assets, while others are caused by improper management.
Out of these, some of the biggest challenges encountered while dealing with reusable shipping assets are:
- Over-stocking in order to avoid shortage of RSAs when required Shipping downtime
- High cost of maintaining RSA stocks
- Under/over utilization of the reusable assets
- The risk of RSA theft
- The environmental cost that comes with keeping RSAs – Increased Carbon Footprint
In order to make sure these challenges are met in the best way possible, it becomes necessary to manage reusable containers.
Why Do You Need to Manage Reusable Containers Effectively?
- Returnable Containers Cost More Than Single-Use Pallets
The biggest hurdle in the adoption of reusable packaging and shipping assets is probably the initial cost of purchase. Although the “per-shipment” costs for reusable shipping containers are lower over time, they’re still a pretty hefty spend to contend with upfront.
Shipping assets like pallets and single-use fiber boxes could cost as little as $15 – $20, while their reusable counterparts could cost upwards of $75 – $100.
- They Require Retrieval
The benefits and advantages of using reusable shipping assets notwithstanding, they’re another supply chain asset to deal with.
Issues associated with managing reusable pallets or containers pose several added challenges to supply chains, including:
- Need for additional labor and resources for reusable asset management.
- Need for additional record-keeping and data entry for tracking reusable shipping assets.
- Need for additional processes such as asset maintenance, repair, or replacement.
There are also other issues to contend with such as:
- Unreliable data entry or tracking due to a reliance on manual processes.
- Difficulty in keeping track of assets due to complex global supply chains.
Smaller companies may be able to get around some of these issues by throwing more manpower at the problem or by using more complex paper-based or electronic logging systems. These hacks aren’t scalable in the long run though, so it’s unlikely that anything short of reliable tracking solutions and a greater degree of automation will help resolve the hassles associated with deploying reusable shipping items. You need to be able to track returnable containers within a supply chain in real time to manage them effectively.
- They Could Be Easily Stolen
Returnable or reusable shipping items are a pretty big expense for a logistics budget; and yet, these “assets” are seldom treated as such. Very rarely are they tracked and managed with the same level of care and scrutiny afforded to other assets in a company’s book. Packaging is, as it has often been, treated like an expendable commodity.
Not everyone sees it that way though.
Reusable supply chain and shipping assets like pallets, crates, and the likes, have significant aftermarket and salvage value, which is why pallet theft is on the rise. There’s a growing market that thrives on the theft and resale of reusables, especially plastic items that can be ground and sold off as scrap. There’s no shortage of unscrupulous elements waiting to capitalize on supply chains that aren’t tracking their reusable shipping assets.
- You Need Auditability If You Are Pooling Pallets
Large enterprises could probably afford the heavy upfront investments of purchasing and managing containers, as well as the lengthy break-even periods involved. Small and medium-sized enterprises (SMEs) on the other hand opt to share the costs of their reusable shipping assets (and their associated overheads) through pooling.
If you are in a pool, it is important to manage your returnable packaging well, not only because you’re trying to avoid bottlenecks in your pallet pooling arrangement, but you also need to verify and audit your bills.
Returnable containers can be a sneaky hidden cost in your supply chain. Learn how to manage returnable packaging better by using this guerilla warfare technique of:
Which 3 Bad Pallet Management Practices Could Cost You Big?
The lack of effective tracking and visibility into supply chains leads to inefficient, wasteful practices in supply chains large and small, some of which include:
- Overstocking Pallets
Shipping assets like pallets are usually overstocked because there’s a fear of running out during peak shipping periods.
While that’s a workaround to a problem that stems from lack of supply chain visibility, it’s not an efficient one, and overstocking pallets is one of the key factors that affects your supply chain efficiencies. Pallets cost money, both to buy and to hold, and buffering idle shipping assets is — just like holding NPAs — a recipe for loss.
- Hiring More Labor
Managing large or unwieldy pallet fleets pose several added challenges to supply chains, including:
- Need for additional labor and resources for inventory management.
- Need for additional record-keeping and data entry for tracking shipping item fleets.
- Need for additional upkeep such as maintenance, repair, or replacement.
Throwing more manpower at the problem or using better shipment logging or tracking systems could help, but the most commonly deployed solutions are still manual endeavors. Such systems aren’t scalable in the long run, and anything short of reliable tracking solutions coupled with a greater level of automation can help.
- Manual Logging and Billing
A surprisingly large number of complex supply chains still rely on manual record-keeping, tracking, and auditing processes. The human element is bound to create snags, and good old human error means data isn’t always reliably captured, analyzed, or presented. The lack of automated data capture or reliable asset tracking means there’s always a heated debate about discrepancies in asset usage, storage, or detention costs.
Why Should You Track Returnable Packaging?
Returnable containers aren’t just an issue for you. The industry is facing a huge challenge. 10% – 20% of annual logistics budgets are spent just to replace missing reusable shipping assets, regardless of whether those RSAs are bought, rented, or pooled.
Most supply chains deal with shrinkage between 3% – 20% annually, which makes recovering reusable shipping a large problem with a large cost. Replacing stolen or missing reusable shipping assets costs supply chains billions every year, with plastic pallet and container losses within the U.S. alone pegged between $800 million and $1.5 billion annually.
Top 6 Reasons to Track Your Reusable Containers
- To manage your returnable packaging better.
- To maximize the ROI on your Returnable Transport Packaging (RTP).
- To minimize buffer stock.
- To reduce lag and avoid downtime in your supply chain.
- Getting 100% auditability on your pallets, whether they’re rented or pooled.
- Future-proofing your supply chain.
Can Better Pallet Management Mean Higher Pallet Savings Potential?
Savings through better pallet management can be gauged by measuring returns in terms of the following parameters:
- Lesser Loss/Theft 10% – 20% of annual logistics budgets are spent just to replace missing RSAs, regardless of whether RSAs are bought, rented, or pooled.
- Improved Utilization: Overstocking is prevalent, and anywhere between 15% – 30% of extra containers in a supply chain are held to offset shortages or avoid running out in emergencies.
- Savings on Working Capital Interest: If your shipments go out a day or two late, your invoicing is delayed, and interest accrues on your working capital for these extra days – interest you’re probably interested in minimizing.
- Savings on Detention Cost: The unavailability of pallets to when shipping items can lead to detention costs, costs that both you and your logistics service provider could do without. This could range from $20-$100 per day depending on the size of your load or its type (FTL/LTL/LCL).
- Reduction in Warehousing Costs: By eliminating your excess pallet stock through better pallet utilization, you also get to shave off the rental and operational costs of stocking excess pallets at your own facility as well as at third-party warehouses.
How to Track Pallets?
Getting a handle on pallets involves identifying the right technology and then building a deployment process. Let us study the various technologies available and how you can put the best to use. We will also look at how you can deploy them, including how to win internal buy-ins for implementation.
Can ERPs like SAP Track Returnable Packaging?
ERPs like SAP have a Returnable Packaging module or RTP module which help you keep track of your pallet stock, but the missing piece is the data collection.
This means that if you can figure out a way to seamlessly scan in your pallets, your SAP Returnable Packaging workflow can be turned into a real-time tracking solution.
To achieve this, you need an IoT technology that upgrades your ERP’s reusable transport packaging module to function in real-time and rid you of manual check-ins, and its associated errors.
What Are the Technologies Available to Track Returnable Containers in Real-Time?
Tracking returnable containers, pallets, crates, and bins is easier said than done. There are three primary cost-effective technologies for tracking shipments or reusable packaging:
- Hybrid IoT solutions working on BLE/GSM/Wi-Fi
- Multi-LPWAN Tags (Nb-IoT, LTE-M, Sigfox)
UHF RFID vs NFC vs BLE for Tracking Returnable Packaging
Each of these technologies works by using a gateway hotspot and tags. Tags are attached to the pallets. The gateway hotspot senses any tags in its vicinity, and informs an inventory tracking software (usually a cloud setup) using a data plan or through the Internet connection available at the premises where the pallets lie.
RFID is a technology that has been available for a while now, and in some forms, it’s been around since the beginning of the 21st century. It uses a fixed or mobile reader as a gateway hotspot that’s able to read passive or active UHF RFID tags.
The read distance with passive tags is very low, which means you need to deploy a lot of readers to assure coverage. Therefore, it is not suitable for effectively monitoring a large number of pallets or containers in a large warehouse.
Active RFID is a better choice because the read distance is high enough to cover the entire warehouse, or at least a significant part of it.
Many companies tried using active RFID to track pallets, but eventually gave up due to its limitations.
The limitations of RFID are:
- Infrastructure requirement — RFID needs connectivity through LAN or Wi-Fi to be present. GSM based RFID technology isn’t very common. The readers are proprietary, which means that you cannot fall back on your smartphone when needed as a reader.
- High cost — Active RFID reader-tag technology is proprietary and hasn’t reached economies of scale yet.
- Lack of visibility in-transit — since RFID readers are expensive and need infrastructure.
- Lack of visibility at your customer’s warehouse — once again due to infrastructure requirements.
NFC or Near-Field Communication technology is relatively new and works on the same frequency as passive RFID. It works similar to passive RFID, but the read distance is even lower.
Therefore, using NFC to monitor returnable shipping assets would end up bring laborious where:
- Every pallet has to be scanned manually at close distance during check-in and check-out
- It’s prone to errors as it involves someone scanning the pallets in and out
Thus, NFC, which is becoming popular as a contactless payment system, and solving other consumer applications, is not best suited for monitoring pallets crates, bins, tubs, etc.
Hybrid IoT (BLE Beacons with GSM/Wi-Fi) – The Best Choice for Tracking Pallets
Bluetooth Low Energy (BLE) Beacons when coupled with GSM or Wi-Fi addresses returnable container tracking almost perfectly.
This is a hybrid IoT technology that uses a portable GSM/Wi-Fi gateway hotspot and BLE beacons. They communicate by beaming signals towards each other just like active RFID, but there are several unique advantages of BLE beacon technology when compared to RFID, some of which include:
- Low energy consumption, which translates to higher battery life of tags.
- The ability to use a portable gateway hotspot like the “Bee” or even your mobile phone as a reader.
- Low-cost, as BLE components and tags like the BeeBeacon have reached economies of scale. Bluetooth is also an integral feature in most smartphones today.
- The ability to monitor your pallets seamlessly, in your own warehouse, at your customer’s location, and in-transit.
Steps to Implement Pallet Tracking Using Hybrid IoT
Tracking your pallets involves monitoring your own warehouse, your customer locations, and everywhere in between, especially when they are transporting your shipment.
Your first step is to provide seamless connectivity to enable this seamless visibility, which involves the deployment of gateway hotspots such as a portable wireless device like the Bee, or perhaps even your own smartphone with a monitoring app like Mobile-as-a-Bee (MaaB).
- Secure Your Own Warehouses and Customer Warehouses
Use gateway hotspot devices which work on GSM or Wi-Fi. Set them up such that they cover all the areas of the warehouse or customer locations, allowing you to monitor every pallet moving in and out.
- Secure Your In-transit Movement
For your in-transit movement, you can use a gateway hotspot device like the Bee or turn your driver’s smartphones into readers/trackers with an app like the MaaB.
If you are using a device, place them with your container or provide to the driver.
Also, and I cannot stress on this enough, ensure that your service provider handles its reverse logistics; losing gateway hotspots can be expensive, and it’ll certainly impact your ROI over time.
- Get Buy-ins from Your Internal Stakeholders to Get Started
This is a critical part of achieving success.
Your finance teams, sales teams, quality teams, and executive management would all need to be on board with your pallet management initiative using IoT.
Having all your stakeholders support your initiative will not only help you move your implementation forward, but also improve your chances of getting ROI on your IoT investment.
To do this, you will have to understand how to present your business case to each of them, and how their respective departments can benefit from your returnable container visibility and digitization initiative.
- Know how to implement this low-cost hybrid IoT BLE/GSM/Wi-Fi based solution to get a handle on your pallets all across your supply chain.
- Get tips to win the buy-ins of your internal stakeholders to get started.
- Build a process and ensure ROI.
Getting Started — Tackling Pallets
To track returnable packaging and maximize the ROI from your implementation, you need a hybrid IoT solution which consists of:
- Monitoring your returnable containers, not only in your own warehouse, but also at your customer locations, and when in-transit.
- A data analytics platform that seamlessly integrates with your enterprise software.
- Reliable reverse logistics for your IoT devices so you don’t have to worry about losing them.
- A 24×7 control tower that can warn you about anomalies in your pallet management, so you can take corrective action before it’s too late.
Roambee crafted the BeeBeacon solution combining innovative GPS/BLE/GSM/Wi-Fi based IoT technology with proactive 24×7 BeeCentral, and is the industry’s first end to end pallet monitoring solution
Multi-LPWAN Tags (Nb-IoT, LTE-M, Sigfox)
When it comes to monitoring reusable packaging items, multi-LPWAN tags (Nb-IoT, LTE-M, Sigfox) are the newest chip in the block. With the standards of technology it sets and by the way it manages the packaging containers, it can be safely stated that it is the solution that suits the most and has none of the cons above – it is practically infrastructure-less, facilitates easy installation (just attach tags to the returnable containers), and costs the least of all the solutions.
It can be easily set up by picking the right LPWAN tags and connectivity that could monitor your assets without disconnecting and malfunctioning and gather data for cloud even when there are low or no signals. This is followed by establishing what your data analytics and alerts can save you, and finally enforcing prompt action.
In short, in order to start monitoring the pallets, all one needs to do is attach the LPWAN tags to the packaging container and it’s good to go. There is no need to set up anything at any of the facilities, since the tags can track the containers on their own.
Going by the pros and cons of all the RSA tracking solutions, there is no second-guessing that using multi-LPWAN is the most flawless way to monitor your Returnable Shipping Assets and perfecting the art and science of Pallet Management. Multi-LPWAN technology is best-suited to monitor your returnable container – in your warehouse, at your customer locations, as well as in-transit – across your supply chain.