The COVID-19 pandemic had a tremendous impact on global supply chains, with 45% of firms surveyed by the Economist Intelligence Unit (EIU) reporting a significant disruptive impact. As companies sought to reinvent processes during the pandemic, disruptions to their business incurred substantial financial costs (averaging 6%-10% of annual revenues).1 At the same time, companies are dealing with consumers’ expectations for increased convenience and speed.
More open to change than ever before, companies are now seeking ways to mitigate disruption and add operational efficiency in their plants and DCs. Everyone agrees that product needs to move faster, safer and more cost-effectively. One way to get started is by implementing plastic reusable pallets and totes due to their automation, sustainability and hygienic advantages.
Automation
Automated work environments are rapidly increasing around the world. The global industrial robotics industry reports an annual growth rate of 13% from 2014–2019.2 About 39% of survey respondents reported implementation of robotics or automation equipment in their business operations today and an additional 73% expect to do so over the next five years.
To support the increased adoption of automation, reusable totes and pallets provide dimensional consistency and repeatable performance for all types of automated systems. These solutions have no loose boards or flaps that can lead to automated system downtime. Moreover, their standard sizes and surfaces are easily read by eyes and sensors, leading to operational efficiencies.
Cleanliness = Savings
Maintenance time takes away from productivity on a plant floor. But reusables help cut maintenance costs related to dust, debris and wood chips, keeping floors and equipment clean while also improving workplace aesthetics. One dairy processor cites that one shift (12 hours) a week was needed to clean up the wood pallet shavings, leading to inefficiencies and system downtime. That alone equates to an ROI of $105K a year in damage and labor savings by switching to reusables from wood pallets.
Sustainability
Companies are more open than ever before to implementing more sustainable operations. According to Omera Khan, professor of Supply Chain Management at Royal Holloway, University of London, “We are seeing an extraordinary impact on global supply chains. To really change the way they tackle these disruptions, companies need to change the way they work and think. Companies need to think more sustainably and locally.”
Reusable packaging can help companies do just that. By converting a 3,000-pallet fleet from wood to plastic, a company could expect to reduce waste by 72%, electrical usage by 71% and greenhouse gas emissions by 3.2%. What’s more, plastic pallets are fully recyclable at the end of their service life. With consumers increasingly looking to purchase from sustainable brands, it’s important for companies to look back at their supply chain and start at the source.
Supply Chain Disruptions Are the New Normal
While we’re moving forward and supply chains are recovering, disruptions are not going away forever. More than half of the executives surveyed (54%) say that businesses must make significant changes in order to effectively manage supply chain disruptions in the next five years.1 How are you making your supply chain more resilient and agile? To create lasting change and mitigate future disruptions, packaging is a great place to start.
Sources:
1 The Business Costs of Supply Chain Disruption, the Economist Intelligence Unit (EIU)
2 2020 MHI Annual Industry Report
