Makro goes for a closed circuit with pallet pooling

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No more hidden costs and complicated pallet exchange

Good Food, Party, Home & Craftsmen. That is Makro’s retail concept in a nutshell. Makro supplies more than a thousand products to retailers, good for at least 450,000 pallets a year. It goes without saying that, in a case like this, an efficient supply chain is of paramount importance. Switching to pallet pooling for their order picking activities enabled Makro to substantially improve its product flows, in terms of efficiency a well as sustainability. Not only that, the company’s logistics partners also noted marked benefits with regard to operational activities.
 

Pallet pooling model tailored to Makro

Facilitating a smooth supply chain at Makro is a daily challenge for supply chain operations managers Laurens Verbist and Guy Gys. To get products from the distribution centre to each of the 18 retail stores, Makro relies on three external logistics partners. It comes as no surprise that all parties share the same goal to optimise the supply chain.

The challenge
For many years, Makro used traditional white wood exchange pallets to facilitate order picking for its shops. Once the pallets were empty, the retail employees would send them to one of their three external logistics partners. “As simple as this sounds, we never managed to get the exchange process completely under control”, explains Laurens Verbist. “Pallets seemed to simply go up in smoke from time to time. Every year we had to buy new pallets to replace the ones we appeared to have lost.”

The solution
CHEP considers it as its mission to enhance the efficiency and sustainability of supply chains. The specialists at CHEP therefore proposed analysing the various goods and flows at Makro to identify the bottlenecks. “The administrative process with regard to the exchange of white pallets was too complicated, and therefore not always accurate”, recalls Jan Smet, account manager at CHEP. To simplify the chain, Makro developed a share & reuse system in collaboration with CHEP at the beginning of 2018, that was tailored to the requirements of Makro and Metro.

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Makro_Verbist&Gys
Makro developed a share & reuse system, that was tailored to the requirements of Makro and Metro.

All goods that are sent from the warehouses to our shops are now transported on blue, reusable CHEP pallets. The main advantage is that the pooling pallets stay where they are delivered, and we pick them up or send them to a CHEP service centre.

Laurens Verbist Supply Chain Operation Manager, Makro

Advantages for Makro

makro logo
Switching to a share & reuse model creates a closed circuit between the shops and the logistics partners.
  • Guaranteed quality without hidden costs
    In autumn 2018 Makro made the full-scale switch to pooling for its order picking. “All goods that are sent from the warehouses to our shops are now transported on blue, reusable CHEP pallets”, continues Verbist. “The main advantage is that the pooling pallets stay where they are delivered.” Makro returns them from there to their point of origin to be reused for a new order picking activity. “Or have them picked up by CHEP for inspection and, where necessary, repair at a CHEP service centre.” This way, the quality of the pallets is guaranteed and the hidden costs of pallet exchange largely disappear.
     
  • Faster unloading and processing of goods
    Not only Verbist and Gys consider the switch to pallet pooling to be an improvement; so do their colleagues at the shops and the suppliers. Considering that administrative processing or exchanging procedures are no longer necessary, the trucks can carry bigger loads and goods can be processed and unloaded faster than ever before. Moreover, CHEP monitors the entire process. Jan Smet: “Every three months we meet with Makro to see if the volumes correspond to the forecasts, and if adjustments need to be made. We make every effort to ensure that pallet handling is carried out as efficiently as possible.”
     
  • Smooth pallet rotation thanks to shared pallet management
    In the retail sector, you don’t often come across companies like Makro, where order picking takes place exclusively using one type of pallet, in this case CHEP pallets. Jan Smet: “Most retailers use all sorts of different pallets, which makes pallet management unnecessarily complex.” However, switching to a share & reuse model creates what you could call a closed circuit between the shops and the logistics partners. “The logistics partners have taken over a big chunk of the pallet management process”, explains Jan Smet. “As a result, pallet rotation is faster and more efficient.”

Moving towards a single type of pallet in the future
Makro hopes to convince more and more suppliers of the benefits of using pooling pallets in the future. “It would be fantastic if we could use only one type of pallet”, says Guy Gys. “The more suppliers make the switch, the easier it will become for everyone.”

Is pallet pooling the future in retail?

“I’m certain of it”, affirms Jan Smet, account manager at CHEP. “Almost every retailer on the Belgian market now accepts pooling pallets. The suppliers are also becoming convinced of the benefits. As a matter of fact, we can say that in 90% of the cases, pallet pooling will also help the suppliers cut costs. Many people think that the use of exchangeable pallets is free of charge, because they supply them and get them back. Still, people should be aware that this exchange is nevertheless subject to charges. CHEP can conduct a no obligation analysis of the supply chain, to identify and subsequently help eliminate any hidden charges. This way, we can join forces in enhancing the efficiency and sustainability of supply chains.”

chep pallets
In 90% of the cases, pallet pooling will help suppliers cut costs.

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Makro goes for a closed circuit with pallet pooling | CHEP