Ecr pallet workshop_presentation_ecr_poland

Working together
to fulfil consumer/shopper needs
– better, faster, at less cost and in a sustainable way

ECR
Pallet Workshop
print-out

ECR-Rus
Moscow, 2010.11.09

Agenda of the Workshop

 Introduction & field visit
 Defining the problem (one perspective for all)
 Joint understanding of the pallet situation right now
What types of pallets are really used
 What do commercial and logistics agreements say
 EUR vs GOST pallets - what's the difference
 3D Pallet Management - legal, safety, economics
 Pallet Management variety - possible alternatives
pallet pools business models, 1-way, traded pallets etc.
 The way forward for ECR-Rus & pallets
ECR Rus Moscow, 2010.11.09 2

Introduction: why ECR & Pallets

 Problem of all participants and supply chains
 Different aspects of the problem for manufacturers,
logistics companies and retailers – but the same core
 No single company could solve it itself
 Increasing number pallet-related conflicts between
trading partners

 The only possible solution – JOINTLY elaborated best
practice guidelines & market-wide standards
 ECR – the only platform gathering the three sides of
the story at one table…

ECR Poland pallets history

 „Pallet Market in Poland” ‘2005 report by ECR & ILiM
Thorough analysis of the situation, root causes and solutions
proposal
Outcome - continuous improvement approach
 Work at basics – simple, easy-to-use, efficient tools:
Cooperation with pallet service and solutions providers
Pallet Assessment Cards - v.1 ‘2006, v.3 – ‘2008
Pallet Costs Analysis sheet – ‘2006
 Educational programmes – both open and in-house
 Close cooperation with PKN Epal as of ‘2008
Promoting one standard for pallets assessment

Pallets issues: points of view

 Retailers / distributors
…

 Manufacturers
…

 Logistics Service Providers
…


Main issues listed in Poland

 Costs - High investments/loss in new EUR pallets
Frustration of pallets not returning
 Warehouse operations efficiency
Pallets assessment and „negotiations”
Pallets segregation
 Legal safety
Intellectual Property Protection & Industrial Design Rights
Vs counterfeit an low quality pallets
 Labour safety – high racks, etc.
 Distortion of regular commercial cooperation
Pallets discussion as part of commercial negotiations

Pallets in Russia – the problem

 The Problem is defined as:

………………………………………………………………
………………………………………………………………

…and as such, understood by all parties involved in the
same way.


Pallets reality in Russia

 Kinds of pallets commonly used

 Are pallets (types) specified in commercial contracts?

 Number of pallets shipped annually

 Number of pallets purchased annually

 Pallet money/costs - estimates


Pallets reality in Russia

 What is official, what is real (the standards)

 Write-offs, pallet losses, pool depreciation…

 Pallet market stakeholders, key players

 Anything else?


EUR vs GOST vs „?” Pallets
EUR Pallets GOST Pallets Other pallets
Market share

Average quality

Quality
assurance
Standards
availability
Standards
awareness
Counterfiting

Return rate

Costs involved


EUR vs GOST vs „euro-type”

 Any technical / functional differences?

 Are the standards really respected?

 Are they inter-changable
1-to-1?
Separate stock?


EUR Pallet - standard

 EUR pallets are trademark, also the practical,
industry-approved standard
 EPAL is a pallet-governing body
 pallet producers association,
 quaity assurance role
 EPAL organisation is the entitled, legal represntative
of the EUR trademark owner
 The official definition – UIC Codex 435-2
 Pragmatic tool – ECR PL’s Pallet Assessment Cards
Initiated by ECR, supported by EPAL and the whole market


Phito-sanitary requirements

 IPPC – International Plant Protection Convention
ISPM 15 standard – since 2002
To decrease the risk of transport and expansion of diseases
and worms affecting trees and forests
Actively in place in European Union, big organisations (IKEA),
and others
In Poland – mandatory for all new pallets since 01.2010.
HT – heat treatment
Old pattern New pattern


3D of Pallet Management

 3 dimensions
Legal
Safety
Economics
 incl. geographic factor & feasibility



 Legal dimension
Trademark-related
Product related
Tax / returnable packaging aspects
Practical and state-official standards and requirements

They are…



 Safety dimension
Labour safety
 Special focus on pallet racks
 warehouse operations
 etc.
Product safety
 damage
 contamination
Warehouse equipment safety

They are…



 Economics dimension
Cost of new pallets / investment
Return ratio
Pallet operations (segregation, repairs, storing, utilising)
 Labour
 Equipment
Cost of pallet accountancy
 Financial
 Political
Cost of frozen capital
Impact of geographies - 1 standard vs dedicated solutions
Feasibility – geographical, commercial/political

How to measure real costs


Pallet Costs Analysis sheet

Free download from www.ECR.pl, www.ECR-ALL.org

Costs & feasibility study

Own pool of EUR or GOST pallets Rented pallets / 1-way / Traded
Price of new pallet Cost of rental / delivery
1 standard for all customers/locations How about remote deliveries
”Natural damage” / pool depreciation ”Natural damage” / pool depreciation???
Theft, shrinkage Still attractive?
Repair costs Costs of delayed return
Transport costs (empty pallets) Transport costs (empty pallets) ???
Warehousing costs (empty pallets) Warehousing costs (empty pallets) ???
Warehouse handling Warehouse handling
Administration costs Administration costs ???/!!!
”Political costs” - negotiations ”Political costs” – entry barriers
Legal risks Costs of legal check
Environmental fees Pallet for internal use


What are the options?

 1-way / disposal pallets (sometimes called „industrial”)
 Returnable pallets purchased, „owned”
 Returnable pallets leased/rented


Option 1 – 1-way, disposal

 Disposal almost always equals cheap
 Safety & quality issues, low applicability for FMCG
 Sometimes necessary – e.g. pharmacy
 Sometimes cheapest – e.g. construction business
 Sometimes reasonable – long distance deliveries,
limited time options


Option 2 – your „own pool”

 Standard pallets – GOST or EUR, EUR2, EUR3 etc.
 Widely accepted throughout the market
 You either trade them – with every delivery
customer is invoiced for the goods and the pallets
 Or you „manage” them – trying to get them back
By yourself (with delivery 1-4-1, every set time or quantity)
By specialised „pallet management” company / LSP
 Your own pallets you don’t always really own…


Option 3 – rental pallets

 Compatible with standard pallets – usually EUR
 Increasing acceptation throughout the market
 You order the given amount you need for certain time,
inform the rental company on the destination and
quantities and get invoiced by the end of period
 You don’t buy, own, repair, stock, retrieve pallets
 Pool operator assures sufficient supply, quality and
legal safety of the pallets, takes care of the returns
 Charges you on agreed conditions
Fees may vary depending on customers, return time


The Pallet Odyssey Continues…

 Revolutionary Technologies? RFiD?
 Pallets owned vs rented?
 Wooden pallets (EUR/pools)?
Cardboard?

Plastic?


Expected future in Russia

 1 standard vs multiple (few) standards vs no standards?
 Will the key players be willing to align?
 Solutions for European part and for the far East?
 Expected availability of rental pools over near future?
 Purchased vs owned?
 Revolution vs evolution?
 What needs to be checked, changed, improved?


Any questions?

Thank you for your attention and cooperation!
Mateusz Boruta
mateusz.boruta@ecr.pl
www.ecr.pl
www.ecr-all.org

ECR Rus Moscow, 2010.11.09

Ecr pallet workshop_presentation_ecr_poland

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