Pallet Recovery Keeps the Circular Supply Chain Moving

Pallet Recovery Keeps the Circular Supply Chain Moving

CHEP is committed to a share and reuse model for pallets that contributes to a regenerative supply chain. The provider increased its focus on pallet recovery—a vital step to ensuring goods continue moving throughout the supply chain and ultimately meet consumer demands.

At its core, CHEP, a global provider of share and reuse (or pooled) pallets, crates, and containers, is the backbone of the global supply chain, says Jim Congrove, the company’s director of U.S. asset management.

To continue keeping goods moving across the globe after a tumultuous few years, CHEP increased its focus on pallet recovery—a vital step to ensuring goods continue moving throughout the supply chain and ultimately meet consumer demands.

“Supply chains have learned from the chaos and uncertainty of the past few years, and they want peace of mind that pallets will be available when they need them,” Congrove says. “When pallets aren’t returned to CHEP, it’s harder for us to be able to move inventory to where and when it’s most needed.”

Encouraging Recovery

Pallet recovery has become an important topic, especially since the beginning of the pandemic, as the lumber and labor expenses of building new pallets and providing them where needed have soared.

To reduce the overall cost to the supply chain, CHEP pursues all avenues to recover its assets, including partnering with the recycling community. The company compensates nearly 1,800 pallet recyclers through its asset recovery program (ARP) for the return of CHEP pallets and increased the program compensation in March 2022 to encourage increased return rates.

Since adjusting compensation, CHEP has picked up more than 50 new recyclers and seen an increase in return volume from existing participants. On top of the ARP program, CHEP quickly increased its low-volume recovery fleet capacity, allowing it to more frequently collect directly from small and mid-sized retailers where returns commonly lag.

Lastly, the company expanded its asset protection team to deter unauthorized pallet resale and reuse. In just the past two months, the team identified and recovered nearly 100,000 CHEP pallets illegally sold to businesses across the country.

“Over the past year, we have increased our collection points by 24% and our pallet volume collections by 45%,” Congrove says. “By collecting lower volumes at higher frequencies, we’re able to help retailers keep their docks free of pallets. That space then can be used for their core business needs and pallets don’t unsafely accumulate on the back docks.”

Proactive Returns

Even with the recent focus on pallet returns, companies can do more to keep the supply chain moving. For instance, CHEP encourages manufacturers to continue playing a proactive role in returns by working with their retailers on improved processes, such as educating and partnering with retailers on the circular model.

Businesses that hold on to just a few pallets cause significant ripple effects for others in the pallet pool. “We don’t want stock outs to be a reality,” Congrove says.

“It may be tempting to say, ‘I’ve only got 10 pallets, what’s the big deal?’ But every pallet that isn’t returned is another pallet that must be built using new materials—taking away the ability to get 10 recycled pallets back in the supply chain and reused by manufacturers, which also increases the total cost of goods,” he says.

Working together on pallet recovery doesn’t just help from a sustainability perspective, but it is also good for business continuity.

“When we look at one of the largest pain points our industry faces today—providing goods to consumers quickly—having pallets available to ship on demand will help the U.S. supply chain respond to ever-evolving consumer demands,” says Congrove.

“If we all work together and take action, we can help eliminate this challenge while also reaching our shared goals to be planet positive,” he says.

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