11 FAQs about pallet pooling

11 FAQs about pallet pooling

April 27, 2020

11 FAQs about pallet pooling

We often have questions about how the pallet pooling system works. And this is quite natural - the technology came to Russian market from Europe quite recently, and many companies are not yet familiar with this approach. CHEP can make the supply chain easier and more efficient. To explain how pooling works, we, together with Retail.ru, collected the most popular questions from our customers and tried to answer the ones.

Contact us if you have more questions

11 FAQs about pallet pooling

  • 1. What does pallet pooling mean and what is the difference between pooling and renting of pallets?

    Pooling is a pallet circulation system in which customer takes a pallet for use, rather than buying it . To understand how  pooling differs from the classical rent, you can refer it with the car: you can buy a car, rent it or use car sharing service. When renting a car, car sharing user must return the car to the point of reception, and car sharing service agreement allows to leave the car in locations convenient for the user, and at that moment the user's responsibility ends. Overall, the pallet pooling is very close to the car sharing system: the customer uses pallet until he needs it - load goods and sends it to the counterparty. Everything that happens with a pallet after it is shipped to the place of destination is CHEP job.

  • 2. What is the pallets cycle time, and how is it measured?

    Broadly c pallet movement cycle – is a period between the moment when pallet is sent to the customer and moment when pallet is returned to CHEP service center for inspection and repair. For our customers, the cycle of pallets starts from the moment of delivery of the pallet to the warehouse or production facility of the customer until notification of CHEP about sending a pallet with goods to retailer/distributor. 

  • 3. How to calculate the cost of the own pallet cycle in the company?

    To answer this question, we need to proceed from the main list of costs in the supply chain related to pallets:

    • Cost of owning of pallets : purchase of pallets , the cost of renewing the pool (the cost of additional pallets that have been lost / broken); the sum of frozen funds that goes to the purchase of backup stock of pallets , sale/disposal of scrap pallets, which comes from the retail. 
    • Operational costs : inspection, sorting, repair, purchase of spare parts, storage of pallets in a warehouse.
    • Тransport costs : handling , shipping and returning a pallet from retailers.
    • Administrative costs: any questions, related on pallets, pallets reconciliation of balances with counterparties, the administration of the process of manufacture and pallet turnover.
  • 4. How to evaluate the economic effect of the pooling system in comparison with the buying of a pallets?

    The main savings from switching to pallet pooling system are achieved by reducing administrative and transaction costs: no need to keep a stock of pallets in the warehouse, store them, inspect, repair, return from retailers. Total costs in comparison with the cost of owning are considerably less. At the same time, the final cost of services for each company is calculated individually, however, as well as the expediency of transition to this system.

  • 5. How to return pallets?

    CHEP takes care of the return of pallets  after manufacturer sends it with the goods to the retail or to distribution centers. For collecting pallets CHEP makes an agreement with retailers and distributors, according to which, CHEP has the right to collect empty blue CHEP pallets.  When a sufficient number of blue pallets has accumulated in the warehouse , CHEP collects them to a service center for inspection and repair.

  • 6. How to switch to the pallet pooling? Is there a “universal” scheme for the transition of the entire production to blue pallets?

    There are two approaches of transition to pallet pooling. The first approach is to switch completely from white pallets to blue ones, this is easier in terms of managing the processes related to pallets. The second approach is to go step by step: start with selected flows, where it is easier for the manufacturer to track the shipment locations of CHEP pallets, for example, in the production of private label. With each customer CHEP builds a separate scheme of work based on the list of its counterparties. If the manufacturer takes the pallets for rent, then he usually cooperates with the largest retailers and distributors. CHEP is already working with the main players of the market or is negotiating cooperation, the client has only to be integrated into a chain of agreements.

  • 7. What is the administrative burden borne by the client under the pooling system? How does customer declare sending of “blue” pallets to the retailer?

    All that is needed for documentary confirmation of the shipment of "blue" pallets is the exchange contract with retailer (the pallet must be deduced from the value of the goods) and the mark in the transport waybill. The data about sent pallets that are received from the supplier are a priority information for administrating the pallet balance with retailers. CHEP has own MyCHEP online platform in which manufacturers and retailers independently declare movements of CHEP pallets. It is also possible to work with EDI format or simply excel tables. In such reports it is necessary to include quantity of pallets, shipment date and locations where pallets sent.

  • 8. Is it possible to use the services of CHEP if the business involves cross-border and national transportation?

    CHEP operates only with its own pool of pallets, legal title confirmed, therefore, the ownership of pallets remains even when crossing borders. At the moment, the company's geography is more than 60 countries of the world, in Russia deliveries are possible to any region except the Far East due to difficult transport accessibility in the area.

  • 9. Some retailers require to deliver goods on non-standard pallets, the parameters of which are specified in the operational requirements between the supplier and the retailer. How to include CHEP into this process?

    It is necessary to include into the contract with the counterparty new standards. In Russia, our clients have access to various kinds of pallets: europallets, industrial pallets, "Dusseldorf"alfpallets, plastic quarter-pallets . At the moment, the company has an agreements with largest retailers and with the majority of major distributors, they already know and accept CHEP pallets at their DCs.

  • 10. If a pallet is damaged in production or was sent in the “wrong” location , where CHEP not be able to collect, how are things regulated in this case?

    Before the start of cooperation, CHEP signs a contract with the customer, where parties agree on the locations for sending the pallets. Ofcource mistakes happen: according to the company 's internal statistics, about 7% of the pallets are sent to "wrong" locations, from which the company cannot collect them back. The damage ratio of the “blue” pallets at the production sites, before the ones shiped to the retail, is minimal and amounts to a fraction of a percent. Such issues are regulated in the contract, where a fixed amount of the penalty is prescribed in a particular case.

  • 11. What is a service center?

    A service center is site where CHEP brings pallets after completing the “supplier-retailer” cycle. Here pallets are inspected, sorted by type of damage, repaired, washed, dried. In Russia, CHEP has 3 service centers and 1 production facility. In addition, the company's global policy implies active connection of third-party players and maximum transfer of processes to outsourcing , therefore, additional hubs of 35 partners of the organization are open throughout the country , where pallets are inspected under control and according to CHEP standards. In total , the company plans to open more service centers in the country. Increasing the number of such facilities will reduce the cost of the company's services.

Why Pooling?

Why Pooling?

what does pooling means?
Coming up next

  • Why Pooling?

Why Pooling?

To know more about what pallet pooling is watch this video.

Author

Andrey Pisartsov has been Country General Manager of CHEP Russia since 2017. 
Throughout his career Andrey  held senior leadership roles in different international companies of industrial packaging industry, agricultural sector and consulting. 
Andrey holds a Master Degree in Economics, Marketing and HR.

Find CHEP platforms

Please enter your details below

  • This field is required
  • Your entry is not of the correct length
  • Your entry should not contain any URLS
  • This field is required
  • Your entry is not of the correct length
  • Your entry should not contain any URLS
  • This field is required
  • Your entry is not of the correct length
  • Your entry should not contain any URLS
  • This field is required
  • Your entry is not of the correct length
  • Your entry should not contain any URLS
  • This field is required
  • This field is required

By submitting the form I accept CHEP data management according to CHEP privacy policy

If your download doesn't start shortly please click here

Select language

Russia
Done

Not your country or language?

Change country

11 FAQs about pallet pooling