Pallet Standardization

Recommended Pallet Size

4-way entry, 1000mm x 1200mm pallet is the recommended standard for the grocery
and fast-moving consumer goods industry. The standard pallet shall have a safe
working load of minimum one tonne.

RECOMMENDED PALLET
1200mm x 1000mm 4-way entry pallet is in accordance with the ISO6780
specification.
Nominal Dimension of pallet (L or W) Entries and openings
L1 and W1 max. L2 and W2 min.
1000 150 720
1200 150 770
Dimensions in millimetres

Why 1000mm x 1200mm pallet?

• Compatible with standard ocean going containers and the majority of trucks
• Dominant size used in Asia (China, Hong Kong, Thailand, Malaysia,
Indonesia, Philippines and Singapore)
• Endorsed by ECR Asia
• Conform to International Standard - ISO 6780 'General-purpose flat pallets for
through transit of goods - Principal dimensions and tolerances'
• Conform to Singapore Standard - SS 334 'Specification for Timber Pallets'
• Major retailers in Singapore have already adopted this standard
• Sufficiently wide for drive in racking
Benefits of Pallet Standardization

Standardization of pallets provides the platform for pallet exchange. In the ideal
scenario, goods can be transported from the manufacturer, through the distributor, to
the retail store on the same pallet. By eliminating the need for manual transfer of
goods to another pallet, productivity and work efficiency are improved. The reduction
in both labour and handling of goods will reduce delivery and transfer costs.
Standardization of pallet sizes will in turn allow standardization of palletisers, racking
and warehouse design. This will result in economy of space and facilitate automation.
Other benefits include the following:

• Reduction in multiple handling

• Reduction of damaged goods losses through minimal manual handling
• Reduction in number of transportation trips
• Minimization of the wastage of pallets
• Elimination of the need for sorting of pallets
• Reduction of unloading time for suppliers
• Reduction in warehouse storage cost
• Facilitates the concept of shared assets
• Facilitates regional trade and pallet pooling activities

The ECR Standard Pallet Implementation Project in Singapore

The Pallet Standardization Working Group within ECR Singapore has made
recommendations to adopt the 4-way 1000mm x 1200mm pallet. However, there is a
need to both accelerate the pace of and widen the implementation of the standard
pallet in the FMCG industry to realize the benefits of interoperability as soon as
possible and transform the industry. Hesitancy amongst the various players in the
FMCG supply chain creates doubts about actual operational benefits that translate into
real cost savings gained from using standard pallets. This issue of achieving
interoperability within the FMCG supply chain in Singapore by using a common
platform cannot be realized and shown until a pilot study of the actual operational
benefits is carried out.

I. Objectives and Description of Project:

The objectives of the ECR Standard Pallet Implementation Project are defined as
follows:

o To implement ECR Standard Pallet.

 o To evaluate the benefits of the pilot ECR Standard Pallet
Implementation Project.
o To publicize the results of the pilot so as to encourage more companies
to adopt the usage of the ECR Standard pallet rental to secure
maximum benefits.

The ECR Standard Pallet Implementation Project started in January 2000 in

Singapore with duration of 1 year involving 4 commercial companies as follows:
1. YHS (Singapore) Pte Ltd

2. Grocery Logistics Singapore Pte Ltd, the logistics arm of NTUC Fairprice
Co-operative Ltd (NTUC Fairprice Co-operative Ltd is the largest supermarket
group with 72 branches and annual turnover amounting to S$917.6 million in
1998/99)

3. LHT Holdings Ltd will provide the pallets used for the pallet pool

4. Unilever Singapore Pte Limited

To ensure objectivity of the measurement, a team of 4 students with the supervision of
2 senior lecturers and 1 deputy director from Singapore Polytechnic act as an
independent body in performing data collection and measurement. The 4 students
from Singapore Polytechnic were sent to the participating companies to study the use
of standard pallets from May to June 2000. Surveys and interviews were conducted to
identify the benefits of using standard pallets. The data collected in May/June were
reviewed and verified again with the companies in the November and December
period by another 4 students from Singapore Polytechnic. PricewaterhouseCoopers
played the role of an advisor throughout the 1-year duration of this project.

II. Benefits of Using ECR Standard Pallets:

This pilot project has shown that adopting standard pallets will increase efficiency to
the supply chain by improving the productivity of the 4 participating companies'
activities. The following are some benefits that were quantified through the
implementation of this pilot project:

o Reduction in the cost of ownership through leasing of pallets

o Improvement of productivity in transportation by reducing the delivery
trips
o Improvement in production efficiency by manufacturing a single
standard size pallet
 o Optimization of storage space by redesigning the warehouse racking
system
o Improvement in manpower productivity in warehouse

The findings showed an average Internal Rate of Return (IRR) of 155% over 5 years
on a recurrence basis. This translates to a return of 1.55 times the money invested in
the project. The IRR is computed based on the cost incurred to implement this project
and the benefits reaped after implementation.
The above benefits represented in pie chart can be shown as follows:

III. Future plans for the project

The project findings will be shared with the industry through monthly seminars
organized by Singapore Article Number Council (SANC). Company visits will be
organized to encourage the adoption of standard pallets via leasing to reduce the cost
of ownership. Efforts will also be channeled to convince business partners to adopt
standard pallets so as to reap the full benefits in efficiency throughout the whole
supply chain. Press releases to the media will also be arranged.

Pallet Standardization in Hong Kong

Through its supply chain working party on materials handling chaired by Mr Keith
Bartlett of the ParknShop, the Hong Kong SCM Advisory Board (ECR Hong Kong)
put forth a recommendation to industry to standardize the size of entry pallets into
Hong Kong in 1998. The recommended dimension is 1200mm by 1000mm 4 ways.
Major supermarket chains and key suppliers in Hong Kong have now adopted the
standard pallets. However, cost justification still remains a major concern, which
prohibits the wider adoption of the standard pallet in the industry.

A study on "Understanding Supply Chain Costs" was carried out in 2000 to enhance
industry understanding on the "true cost to serve". One of the selected areas of study
was on pallet height standardization. The result of the study showed a clear
opportunity to gain further efficiencies on pallet standardization. A standard Ti/Hi by
product (or SKU) across major retailers, for example, would greatly reduce manual
and double handling and therefore take costs out of the supply chain. It was also
recommended that parameters for lower and upper height limits should be introduced
either across the board or by broad product category. Moreover, on major selling
SKUs, unilateral agreement on ordering of full pallets would be an advantage to all
parties.