Pallet/ULC pooling has become increasingly popular around the world over the last 25 years. There is, however, some confusion about how it all works. Some explanation is given below.
1. 1. Pallet/ULC pooling
Pallet/ULC pooling is basically renting or leasing Pallet/ULCs from a shared pool, regionally, in country or globally. The Pallet/ULCs are provided on an agreed hire charge with the Pallet/ULC provider/supplier invoicing an account holder on a specified basis. The Pallet/ULCs remain the property of the leasing/renting company. This service enables companies to hire as many Pallet/ULCs as required to complete their deliveries and to cover the distribution or storage requirements. When the Pallet/ULCs are moved to the next link in the logistics chain, or are no longer needed, they can be returned or transferred off their Pallet/ULC account and the lease / hire charges stop.
Pallet/ULC pooling is now a popular economic model which supports cost reduction. Businesses now do not need to buy new Pallet/ULCs for each delivery or maintain their own Pallet/ULC pool. flexibility and cost reductions will soon be realised as Pallet/ULCs are only taken when needed and returned when the tasks are completed.
Businesses are taking more responsibility of the environmental impact of their logistics and supply chains through this additional ability to reuse and recycle assets.
2. How it works
Instead of tying up working capital to purchase own assets these assets are basically rented from specialist suppliers. It is important to ensure you are fully aware of all transactions because other account holders may also be performing transactions on your account depending on the type of activity your product is involved in. Customers should be able to ensure all the transactions both on and off your account are correct, good TMS or Integrated Platforms can do this with you so your account remains in good order.
Once a Pallet/ULC account is opened with an appropriate service provider,
Order the number of Pallet/ULCs you need from a supplier, for this there will generally be a document (electronic in most cases) for controlling the product.
Arrange delivery or collection from the supplier location.
The Pallet/ULCs are delivered to you or your client whenever you have set the drop date.
Responsibility for the Pallet/ULCs, once delivered, goes to the user so you should control the operation of your transfers.
When using the Pallet/ULCs with your products, and despatching them to your customers, you will need to control the account changes. It is essential that you ensure the Pallet/ULCs are taken from your account and transferred to the receiving party using an electronic transfer note or a paper docket.
Every Pallet/ULC movement must be tracked with an electronic transfer note or docket, these can be created through a Pallet/ULC tracking system such as PalletizIndia has.
Supplier invoices must always be reconciled with transfer notes - remember these assets do not belong to you - it is equally important to confirm the product on the pallet as it is to confirm the pallet transfer.
Return excess or damaged Pallet/ULCs directly to your service provider, damaged Pallet/ULCs can be refurbished and returned to the supply chain.
All transactions between the issue of Pallet/ULCs and returning them to the supplier is the responsibility of the account holders, therefore it is crucial to accurately track Pallet/ULC movements.
3. Lifespan for Pallet/ULCs
Should a Pallet/ULC become unfit for purpose it can be refurbished, repaired, or even remanufactured which can bring the product back to life. Wooden Pallets and steel or plastic fabricated ULCs are the most common Pallet/ULC types and these can often last many trips before needing repair in fact this lifespan can often exceed 5 years. There are several rental/lease service providers in India today who offer repair services for all their equipment types, this increases the life span of the equipment significantly.
4. Benefits of a Pallet/ULC pooling
Include:
Significantly reduced tied up working capital, change from capex to opex!
Reductions in administration and transaction costs.
No, storing, repairing, tracking, and recovering Pallet/ULCs from the clients for reuse.
Easy access to quality Pallet/ULCs without storing them onsite.
The costs of repairing and refurbishing damaged Pallet/ULCs lies with the supplier.
The environmental impact is clearly measurable and reduces the carbon footprint of the company.
5. Pallet/ULC exchanges or transfers
Differing trading terms in the any marketplace means it is easy to lose control of your pallet/ULC account so you have to have good management of the account, or use a service provider to support you! Invoices should be reconciled to ensure each Pallet/ULC transaction has been processed along with the transfer of the product on the pallet.
If a Pallet/ULC transfer processes with incorrect details you must correct it speedily so that it matches your account. Proof of delivery is required when adjusting or correcting, so it is important to ensure each Pallet/ULC movement is tracked effectively.
6. Pallet/ULC Returns
You will have different options when it comes to returning your Pallet/ULCs to the service provider. And many LSPs will offer a collection service. Once the Pallet/ULCs are returned you will receive documentation for you to record and process on your account ensuring that the Pallet/ULCs are removed from your account and issued back to the supplier.
7. Ownership or pooling?
Now you need to take the time to calculate the following regarding your supply chain:
The purchase of Pallet/ULCs, the cost of safely disposing scrap Pallet/ULCs and maintenance of Pallet/ULCs (including lost products).
Transport costs, such as handling, shipping, and returning the Pallet/ULCs from the receivers.
Administrative costs, such as Pallet/ULC reconciliation of balances with parties and manufacture turnover.
Once you have a baseline for your current transport costs you can calculate the difference in hiring those same Pallet/ULCs.
8. Account status
With an active service provider account you will most likely have access your account with the providers online portal these services will allow you to understand if your transfers have processed so you can check against any invoice.
9. Pallet/ULC management.
Pallet/ULC accounts can be managed by an inhouse account manager, or you can choose to employ an outsourced Pallet/ULC management company to complete the tasks for you. Either way, you should always have a dedicated Pallet/ULC controller, this ensures you are not overpaying on your Pallet/ULC hire and that you are not losing Pallet/ULCs.
10. PalletizIndia iPaaS is made to support you. Our links with service providers and our considerable experience managing accounts for clients can reduce the risk of losses from your account and ensure every aspect of your online pallet/ULC management meets your business expectations.
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