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Pallet Management for CPGs: Part One of a Series

Retailers increasingly are mandating the type of pallet CPG companies are to use.

Block Pallets

In the U.S., the workhorse of CPG supply chains is the GMA (Grocery Manufacturers Association) pallet. The standardized footprint is 48 in. x 40 in., but pallet styles differ. Pallets enable efficiencies in material handling, transportation, and storage.

For most of their history, pallets were regarded as commodities—so much so that pallet management was a contradiction in terms. Back then, the wood stringer pallet ruled. The name derives from the base boards (stringers) that run the length of the pallet. The stringers are notched for fork insertion, resulting in a four-way pallet. (Stringer pallets also are called white pallets, not because they are painted but because they are not painted.)

In a bygone era, CPG companies purchased pallets, loaded them, and sent them on one-way trips. The cost of a pallet was allocated across the load and made a part of the unit price of the product. There was a built-in incentive to purchase pallets at the cheapest price, often at the expense of quality. Pallet failures were common, engendering dissatisfaction from supply chain members, especially retailers.

For decades now, pallet management has been evolving into a more complex function. The evolution coincides with a shift in supply chain leadership, from major CPG companies to major retailers. Circa mid-90s, major retailers were demanding better-performing pallets. Those retailers decided that the answer to their demand was the block pallet. Over the ensuing years, some of the giants mandated that shipments be received on block pallets. A seminal event was Costco’s Block Pallet Initiative of 2011.

Block pallets are constructed of wood. Named for the blocks in the base, they are four-way platforms. Block pallets are sturdier than stringer pallets and hold up better against the physical rigors encountered throughout supply chains.

Retailer preference for block pallets has proven to be a boon to the pallet rental industry.  Supply chain specialist company CHEP, with its blue-painted pallets, controls close to a monopoly. PECO, CHEP’s competitor, supplies red-painted pallets. Both manage a pool within a closed-loop system in which pallets are delivered to user facilities, collected when empty, and finally taken to depots where they are inspected, cleaned, and repaired.

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