You might not know it yet, but pallet costs are affecting your company's profits. They also impact supply chain efficiency and sustainability. The truth is that without a pallet procurement strategy, you may be paying hidden costs when buying and selling pallets.
In the not too distant past, pallets were a stable commodity that could be purchased relatively cheaply. However, recent lumber shortages coupled with uneven global demand have made the pallet market unpredictable like never before.
In today’s transportation market, traditional pallet procurement methods are falling short as prices continue to rise. Case in point: wooden pallet prices increased by 120 percent in 2022 alone. Even though the cost of pallets has trended downward somewhat since 2022, costs remain high and pallet markets remain volatile.
In this blog, you’ll learn more how working with the expert team at PalletTrader on a customized pallet procurement strategy can reduce your pallet-related costs. You will learn about the three pillars: cost, quality, and reliability. Our experts use these to help companies like yours figure out current pallet costs and reduce pallet expenses.
The pallet procurement landscape has changed quickly in a relatively short time span. Nearly every aspect of business operations has been digitized in recent years, which means the process for buying and selling pallets has evolved to include digital platforms.
In today’s world, companies like PalletTrader handle the complexity of pallet trading for you so that you don’t have to. Partnering with us gets you access to nation-wide, vetted supplier networks and connects you with our team of seasoned experts.
With our centralized platform, you can interact with buyers and sellers from across industries and locations. Using a centralized pallet trading platform offers you real-time inventory visibility and transparent pricing, which can greatly reduce time spent on pallet procurement.
As a pallet solutions provider, we take the task of sourcing and selling pallets off your plate. When you work with our expert team, you’ll no longer need a pallet expert in house, which can reduce staffing expenses and improve efficiency.
At Pallet Trader, we also provide the especially valuable service of helping you optimize your spend on pallets as part of an overall pallet procurement strategy. We’ll calculate your current pallet expenses with the goal of lowering how much you spend on pallets.
Our team of experts often will start by calculating total cost of ownership for the pallets you currently own or are considering purchasing. When using a TCO framework to optimize your pallet costs, we’ll evaluate the initial purchase price as well as life-cycle costs of owning the pallets. We’ll also consider the cost of transportation and logistics, as well as storage and handling expenses associated with your pallets. Finally, we’ll factor in end of life value and disposal costs when calculating TCO.
Another way we help reduce your spend is by taking a close look at where and how you source pallets. We may recommend, for example, that you leverage the power of bulk purchasing to get volume discounts to reduce your costs.
We’ll also help you negotiate rates with your supplier if you’re in a pallet supplier contract. We do the negotiating on your behalf so you don’t have to deal with the constant back and forth of contract negotiations. In addition, our team will conduct a cost/benefit analysis of new pallets versus recycled. We will also do price comparisons between local and national suppliers.
To further reduce pallet expenses, we’ll establish a seasonal procurement plan that reduces costs by avoiding purchases during peak pricing periods. We’ll also compare the cost of purchasing pallets outright with other options like renting and/or pooling pallets. With the future in mind, we’ll help you formulate a strategy for dealing with market volatility and/or pallet shortages.
The third and final area we’ll evaluate relative to cost is your company’s current use of digital tools to lower expenses. One of those tools, digital pallet marketplaces, allow you to compare prices and bid quickly to get a good price. Another digital tool we may suggest you consider using is real-time pallet market data. Real-time market data can help you make informed decisions and price more effectively.
We also may recommend that you use automated pallet-ordering systems to reduce your administrative costs. Finally, we’ll encourage you to use digital platforms and suppliers that offer price locking mechanisms that protect you and your company from market volatility.
Another area we’ll consider when creating your customized pallet procurement strategy is sourcing. The types of pallets you purchase and where you buy them can impact overall costs. Our expert team will evaluate your current pallet material selection and standards, supplier quality, and damage prevention efforts and make recommendations for reducing costs.
The cost of pallets has increased significantly in recent years due to rising material costs. Pallets often are made of wood or plastic but also can be made of metal or other materials. Each type of pallet comes with its own advantages and disadvantages.
Wooden pallets are the most common type of pallet in use today because they are cheaper than plastic and can hold heavier loads. Plastic pallets are more expensive but last longer and are easier to clean than wood.
To help get a high return on your pallet investments, we always recommend choosing the right grade for the cargo being transported. You may, for example, need heat treatment for international shipping to ensure you’re in compliance with international regulatory rules (ISPM 15). Our team also can help you develop an internal system for inspecting incoming pallets and creating pallet acceptance criteria to avoid receiving damaged pallets unknowingly.
Another piece of the puzzle our team considers is how you can better manage the quality of pallets that you receive from suppliers. It’s vital to work with a supplier you can trust and count on, which is why supplier vetting is a must.
To reduce headaches down the line, we always recommend using suppliers with an online marketplace like PalletTrader’s that includes a supplier verification process or with certified pallet traders. In addition, we can conduct quality audits and monitor performance when evaluating quality. When and if we find areas that need to improve, we’ll work with your supplier to address the issue.
The final piece of our approach to quality assurance is damage prevention. Pallets play the critical role of protecting products when they’re being transported or stored. In order to avoid damage to pallets and the products they’re protecting, pallets must be properly loaded with stability in mind.
The type of pallet you use also can impact how well-protected products are so we’ll consider that, as well. We suggest always using the proper type of pallet for different types of cargo and becoming familiar with your supplier’s return and warranty policies. Finally, we’ll analyze quality versus cost to better understand the trade-offs of using pallets of differing quality.
If the recent pandemic taught us anything, it’s that planning for the worst around supply chain reliability can protect companies from market volatility and business disruption. In this section, we outline how our team can develop a pallet supply chain management strategy for your business that reduces supply chain reliability risks and safeguards your operations.
As part of your pallet supply chain management strategy, we recommend that you diversify suppliers to avoid single points of failure. If you rely on one supplier for pallets and that supplier fails, that can have an outsized negative impact on your operations. We’ll also guide you in establishing regional backup supplier relationships if you rely on one that’s far from your physical location.
In addition, we’ll formulate a plan for maintaining an inventory buffer, developing emergency procurement protocols, and considering alternate material sourcing to save you time and stress down the line. When and if you do encounter a supply chain issue, this market volatility preparedness will help you handle extreme price swings and avoid supply disruptions.
Optimizing how you acquire pallets should play a role in your pallet supply chain management strategy, as well. Our experts can evaluate and analyze the long-term cost and flexibility implications of purchasing versus renting pallets for your company.
If you’re in a situation where a closed-loop pallet solution makes the most sense, we have a special program for that, as well, that we can help you implement. There are hybrid procurement models that combine pallet ownership with renting and pooling which are another option. Finally, we’ll help you optimize your pallet flow and recovery rates to fine-tune return logistics management.
Relationships with suppliers play a vital role in procurement strategies. That’s why it’s important to build strategic partnerships with suppliers instead of focusing on transactional, one-and-done relationships. At PalletTrader, we focus on building great relationships with suppliers across the United States and Canada so that you don’t have to.
When you partner with PalletTrader, you gain access to a high-quality, vetted network of pallet suppliers that you can count on. Our network is the largest pallet supplier network available, which means our network can meet all your pallet needs.
The final piece of your pallet supply chain management strategy will center on leveraging demand planning and forecasting to your advantage. Predictive analytics provide information on seasonal patterns and projections that can inform and improve your pallet-buying strategy.
Integrating forecasting with your planning process and using market intelligence and supplier alerts to get early disruption warnings can, as well. Our experts often recommend using flexible procurement models to adapt to market changes as they occur. Other ways to reduce costs include using RFID tracking to monitor and track pallet inventory.
As we help you plan and forecast, we constantly monitor pallet prices and other indicators such as results from our semi-annual pallet market sentiment survey, lumber prices, housing construction, and manufacturing trends
Now that you know how we can reduce pallet costs, let us do it for you! Schedule a free consultation with PalletTrader's procurement experts.