CHEP pallets, commonly known as «blue pallets» supposed some years ago one of the most innovative ideas of doing business and It was a brilliant initiative to process materials recovery and reverse logistics optimization.
Traditionally, pallets were purchased from manufacturers and shipped to customers as transport bases of goods sold. Any customer accepted increase in the price of the goods purchased due to receiving pallets in the pool. Thus providers always tried to keep track of the pallets delivered to each of their customers to organize collections of lots of palettes regularly. These collections permitted the recovering the pallets periodically but losing the opportunity to use the back trip space for the return of finished products from customers or raw materials from suppliers.
In other cases, companies reached agreement with their customers so that they had to deliver the same number of empty pallets to the supplier in exchange of those supplied along with the goods. This fact extremely complicated direct logistics as required to be continually moving the pallets up and down along the distribution route.
There were not infrequent disputes between client and supplier about the quality of pallets delivered in exchange or by the pallet state of balance due.
Any strategies discussed above, even with the shortcomings identified, were relatively viable when the transport was directly managed by the supplier. Logically, these strategies became strongly complex when the transportation services were provided by an external carrier or a 3PL, a trend that has grown over the years to make those practices with pallets nearly impossible nowadays.
Chep revolutionized the management of pallets between suppliers and customers providing an innovative solution to put an end to these always uncomfortable and contentious face to face management.
The solution basically consisted in offering to the market high and homogeneous quality pallets and, easily identifiable which were not necessary to purchase. Thus introducing the concept of «rent a pallet.»
The system was simplified to the administration of a single accounting of blue pallets based on the units received from suppliers and shipped to customers who also belonged to the “Chep Cycle”. This balance was only maintained with Chep and not with each supplier or customer accounts, eliminating disputes at this regard.
The Chep billing system was brightly studied as it encouraged the blue pallets consumption as the price that the company should pay to the matrix depended on the number of pallets that it interchanged between customers and suppliers during the period. So, by an accurate scale of rebates, the greater the movement of blue pallets pushed by the company, the lower the final unit cost to pay.
With this system, Chep has a «salesperson” inside each customer, since each account will induce its suppliers and customers to also work with blue pallets, to encourage their rotation and thus reducing the pallet´s unit cost.
A brilliant idea that over time, has been proved profitable for their creators and very efficient for their users.