Independent block pallet study identifies dramatic cost savings opportunities
According to an independent study conducted by The Poirier Group (TPG) in Canada, a single distribution center can save an estimated half million dollars every year simply by using block pallets instead of traditional Canadian pooled stringer pallets. The five-week study estimated total annual savings for a Sobeys warehouse location at $497,500, which included $441,100 in transportation savings and $56,400 savings in operational efficiency.
Lisa Vegso, PECO Pallet General Manager, Canada, said: “We are very pleased to have clear proof of what we knew already: using block pallets can lead to improved efficiencies and substantial cost savings throughout the supply chain. We hope this study helps more distributors throughout Canada and the U.S. to understand the significant benefits of using four-way block pallets like PECO.”
In April and May 2016, PECO Pallet hired The Poirier Group (TPG), a business consulting firm, to conduct a five-week independent study on block pallet utilization in a selected Sobeys distribution center. TPG conducted exploratory and fact-finding interviews at the Sobeys warehouse, collected data, and recorded their observations. TPG then analyzed the data and modeled potential annualized benefits in both time and cost savings. PECO Pallet funded the study and collaborated on the overall approach and timeline, but otherwise had no involvement during the evaluation process.
The most dramatic cost savings were related to transportation efficiency. The average weight of a typical Canadian pooled stringer pallet is 90 pounds, versus 65 pounds for a PECO or similar block pallet. TPG calculated the additional fuel costs that are incurred for transporting the additional weight of stringer pallets. Even more significant savings were identified due to the increased cube utilization possible with four-way block pallets. With stringer pallets, the average number of pallets per load is between 24 and 28. Block pallets allow for up to 30 pallets to be loaded on the floor of the trailer. The combined transportation savings from increasing the cube and reducing pallet weight was estimated at $441,100 per year.
Additional cost savings were identified in operational efficiency. At the Sobeys warehouse, researchers observed that stringer pallets cause issues and delays during loading. While the true four-way entry of a block pallet enables easy access and the ability to pinwheel with a standard pallet jack, stringer pallets require the use of dock stockers, which leads to additional capital and equipment maintenance costs. The total estimated savings in operational efficiency from using block pallets instead of stringer pallets was estimated at $56,400.
