May 29, 2008In today's high-tech market, the wooden pallet is something of an anomaly: the unheralded backbone of the world's shipping and delivery networks is still a rough bunch of nailed-together slats. But with 90 percent of the warehouses throughout Europe and America designed around the wooden pallet's standard dimensions and stable platform, innovation has been slow to take off.
A German company known as Smartflow Deutschland is hoping to change that. The firm has developed an RFID-equipped pallet made of a proprietary recycled plastic that is compatible with wood pallet-oriented warehouse systems. Weighing less than 20 pounds, it can handle loads heavier than a ton.
Smartflow has partnered with S.L.R. Technology Solutions, located in Liverpool, England, to equip the pallets with two separate passive ultrahigh-frequency (UHF) RFID tags that comply with EPCglobal's Class 1 Gen 2 standard. Spaces on the pallet allow room for other tags to be added post-production, in case a customer wants to use a different type of RFID tag. S.L.R. has been responsible for designing the software that tracks and manages the tagged pallets.
Smartflow and S.L.R. are not the first companies to market a plastic pallet. In September 2006, a Florida startup called Intelligent Global Pooling Systems (IGPS) rolled out its first plastic pallets fitted with EPC Gen 2 tags (see IGPS Rolls Out RFID-Enabled Plastic Pallets), which are presently used by such companies as Imperial Sugar (see RFID Sweetens Imperial's Shipping Process) and HEB Grocery Co. (see Growers and Grocers Get Into Plastic Pallet Pool). Some of iGPS' customers, however, have yet to take full advantage of the pallets' RFID capabilities.
Stephan Willigens, S.L.R.'s managing director, says one of the system's biggest advantages lies in the economics of the pallet business. An underappreciated necessity in the shipping and warehouse business, pallets are a serious business, he says. They enable warehouses to stack goods from floor to ceiling, and to facilitate the loading and unloading of products. But the typical wooden pallet can be used only 10 times before it must be replaced—at a cost of between $11 and $15 apiece in Europe. A major retailer's supply chain might include 100 million pallets, all purchased or rented from a pallet supplier. "The customer pays a flat rate, full stop," Willigens says.
By installing RFID chips, Smartflow makes a different approach possible. Instead of buying or leasing wooden pallets from a supplier, Smartflow's customers will essentially rent RFID-equipped plastic pallets. Because each pallet can be tracked from the time it enters a customer's warehouse until the time it leaves, Smartflow can track how long that pallet remains in a customer's possession—and bill that company accordingly. "That way, they only pay for the pallet when they use it," Willigens says.
With a trackable pallet pool, Willigens explains, everyone along the supply chain saves. Vendors don't lose money while pallets sit in a customer's warehouse, and those customers pay to use the pallets only once a supplier's truck backs into their loading dock. Smartflow and S.L.R. estimate companies can save 25 to 50 percent from using the RFID-equipped plastic pallets.
For Heuchemer, the Smartflow system was a means to help automate the flow of pallets loaded with raw materials in and out of his company's factory as part of a $150,000 investment in a new warehouse system. "The new facility will be open for deliveries 24 hours a day," he says, "and because of the use of automated loading devices, it demands optimal logistics."
The pilot project launched in early 2008, and Heuchemer expects the implementation to last for the remainder of the year. Smartflow is currently helping install the logistics software to process and make use of the RFID information, as well as training the company's handling, production technology and logistics teams. After an initial phase in which Heuchemer and Smartflow worked together to stabilize the system's software, the firm is employing a mix of fixed and handheld RFID interrogators to track the pallets.
Although Heuchemer claims it's too early to know how much the system is saving his company, for a packing-industry expert such as Heuchemer, the pallets themselves were a major attraction. Two thirds of his customers are in the food industry, and hygiene and safety demands when working with food are particularly high. Smartflow is able to track the pallets from the time they enter Heuchemer's warehouse until they leave—and is billing Heuchemer and its partners accordingly.
According to Heuchemer, Smartflow's plastic pallets were perfect for the businesses his firm supplies with packing materials. "There's no dust, they're easier to clean, and there are no nails that are dangerous for people," he says. "Plus, they're half the weight of a wood pallet—for the women who work for us, they're a lot easier to handle."
The inclusion of RFID tags sealed the deal, Heuchemer says. "This helps us keep things straight in the logistics flow," he states. "The technology has a lot of promise. It's creating a much closer cooperation between us, our shippers and our customers."
