Case Study #9603 / Visit Indiana State Recycling

CASE STUDY No. 9603

KEY WORDS= PALLETS, PALLET SPECIFICATIONS, PALLET REUSE

Cummins Engine Co., Inc.
Mail Code 60108
500 Jackson Street
Columbus, IN 47201

Contact: Gary L. Gardner, Manager Corporate Packaging. Tel: 812-377-3757. Fax: 812-377-3334.

Summary

By setting standards for pallets and "flipping" incoming pallets--using them for outbound freight--the company has greatly reduced the cost to purchase and dispose of pallets.

Action

Cummins Engine Co. is the world's largest manufacturer of diesel engines. Much incoming material and outgoing product moves on wooden pallets. Before adopting packaging standards in 1991, the company spent a significant amount of money to purchase new pallets and dispose of broken pallets. In 1991, Cummins published packaging standards for its worldwide operations. Among the general concepts that govern packaging management at Cummins is the following, under the heading "Packaging Viewed as Waste": Since packaging is not a product feature that provides value to the end customer, we think of packaging as waste. Obviously not all packaging can be eliminated but major improvements are needed and possible if we view packaging as variable cost and customers take the lead.

Cummins takes the lead on pallets by determining to reuse, or "flip," all possible incoming pallets as outbound pallets. To maximize the possibilities for reuse, the company prescribes the exact design and construction of acceptable incoming pallets, as follows:

"The pallet types and sizes shown are the only standard pallet constructions that will be used throughout the corporation. These styles have been chosen to accommodate business needs at lowest cost to the corporation since they will generally be reused."

Pallet Requirements

All pallets should have 4-way entry. (Two-way entry acceptable with customer approval only.)
Deck boards must be 1/2"(13 mm)thickness minimum.
Pallet stringers shall have the minimum opening height of 3-1/2" (8.89 cm) on either end. The notched area on the sides should have a 2-1/2" (6.35 cm) overall opening height. All notches should be 9" (22.86 cm) long, with radial cut top corners, on 16" to 24" (40.64 cm x 60.96 cm) centers. All stringer pallets shall be double-faced, non-reversible. no single-faced pallets are permitted.
Pallet strength must be capable of bridging the 32" (81.48 cm) open distance between front support and rear support of tier racks.
Any pallet material other than wood needs customer approval prior to its use.
Unacceptable pallet types: Double wing stringer pallet Block pallet."

Payback

The cost to "flip" pallets instead of disposing of them is minimal, and payback in terms of reduced disposal expense and new pallet cost is immediate. Cummins believes it has eliminated the major part of a variable packaging cost by adopting this pallet policy.

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