There is urgent pressure to cut costs wherever you can. But the thing about your pallet price is that it is different than your pallet cost. To use the familiar iceberg analogy, you can see the pallet price – the visible part above the water. That’s the amount on your invoice.
But choosing a cheaper pallet can sometimes be an expensive mistake beneath the surface. While the initial purchase cost of lower-quality pallets may be less, the hidden costs associated with their use can significantly impact a business’s bottom line – and perhaps that of your customer. Some costs are subtle but repetitive. For a supply chain manager, it can be like death from a thousand cuts. Below, we list some of the hidden costs that can surface when pallet quality gets put on the back burner for budgetary reasons:
Product Damage: Substandard pallets are more likely to cause product damage. It can be something as dramatic as pallet failure or a shard or exposed fastener puncturing merchandise. On the other hand, some issues are more subtle and difficult to trace back to an underperforming pallet. For example, a slightly less stiff pallet bought at a lower price might deform more under load, resulting in more “leakers” in your unit load of beverages or pails of paint. Chronic, ongoing damage can be subtle yet costly.
Increased Downtime: If a pallet breaks during loading, unloading, or transport, operations must be halted to address the issue, leading to increased downtime. This can result in delays in the supply chain, potentially leading to late delivery penalties or lost sales. Once again, the negative impacts might be less obvious but equally costly. Poor pallet quality might translate into taking more time to enter and exit pallets with a pallet jack, or extra time and care in placing a pallet into a racking location, adding extra seconds to those actions. Consider that your operation may repeat them thousands of times a day. Take the time to do the calculation.
Additional Labor Costs: In addition to labor inefficiencies mentioned above, handling broken pallets can require additional labor. Workers may need to transfer goods to a new pallet, clean up debris, or repair the damaged pallet, which takes time and increases labor costs.
Damage to property: Damaged or poorly conditioned pallets can damage property and equipment. For instance, a shard of wood can jam in a pallet jack wheel and result in the need for replacement. At the retail store, exposed bottom fasteners can scrape the retail floor.
Injury Risk: Poor quality pallets can pose safety risks to staff and customers. Damaged pallets may increase the risk of slip and trip injuries at retail locations. The result can be lawsuits, workers’ compensation claims, and potential increases in insurance premiums.
Replacement Costs: Light-duty pallets generally have a shorter lifespan and must be replaced more often than more durable ones. Higher-quality pallets typically last much longer, providing a lower cost-per-use than lightweight pallets in a pallet reuse program.
Lost Business Opportunities: If poor quality pallets lead to frequent delays or damaged goods, it could harm your company’s reputation. This could lead to lost business opportunities, as customers may seek more reliable suppliers.
Sustainability Impacts: Durable, reusable pallets have a longer service life, meaning fewer end-of-life pallets need recycling. Additionally, more robust pallets will reduce product damage and the associated greenhouse gas emissions.
Investing in high-quality pallets can help avoid these hidden costs, improving the efficiency of your supply chain and potentially saving your business significant amounts of money in the long run. Don’t just focus on the pallet price. It is worth your while to consider the pallet costs that may not be obvious – the ones beneath the surface. Through that lens, you can optimize pallet selection in your supply chain.
The best pallet for your product will always be the one designed for your product. PalletOne’s Unit Load Design experts can help you build a pallet that perfectly suits your needs and protects your product, while our Pallet Concierge™ program can formulate a plan for keeping your supply in tip-top shape. Request a quote today to get started.
