Tracking bespoke product pallets helps with contract renegotiation
The Situation
The logistics function of a large manufacturer was seeing a drop in the return of bespoke-made pallets for a particular global client. These pallets were expensive to produce and the agreement with the client was that after the products had been delivered, the pallets were sent back to the manufacturer immediately so they could be used again. However, production data for the products and the pallets returned did not match up and pallets seemed to ‘disappear’ resulting in having to make more pallets to supply product and thus more costs.
The Task
Find out where these pallets went. Reduce new pallet manufacturing costs.
The Action / Approach
We installed RFID tags in each pallet and readers across our loading bays so we could track each shipment. We linked the pallets to an order and so not only tracked pallets, but also the products that were despatched against the order in real time.
The Result
We found that products and pallets sent out to UK recipients of the client came back (eventually) from the USA and Far East divisions of the client, ergo: the client was using our pallets for their own internal shipping of the products.
At the next annual price negotiations this information came in handy as the manufacturer could resists pricing pressure by potentially charging the client a ‘pallet rent’.
But as soon as the client realised the manufacturer was tracking the pallets, the internal use stopped and the pallet return rate returned to a reasonable level and new pallet manufacture costs came down significantly.
Focus In On: Responsible for Innovation
New Areas of Value:
Effective delivery against financial targets
Viable, scalable and actionable roadmap to deliver innovation and change
Improved business agility and ability to rapidly respond to change and opportunity
Enabling positive behavioural change
Increased credibility, confidence and influence across the business
Successful, timely delivery of evidence based transformative change
Improvements around:
Inefficient or misaligned operating model and lack of business agility
Poor asset management
Lack of exec sponsorship and track record
