CASE STUDY NO. 9620

KEY WORDS PALLETS, PLASTIC; REPLACING WOODEN IN CLOSED-LOOP SYSTEM

American National Can Co.
211 N. 51st Avenue
Phoenix, AZ 85043

Contact: Robert Brandceph, Production Control Manager. Tel: 602-269-5181 x225.

Summary

Aluminum can manufacturer reduces costs and disposal volumes by switching from wooden to plastic pallets for deliveries to a local bottler.

Action

American National Can (ANC) manufactures 12-ounce aluminum cans. Pallets are used to move newly formed cans to the company's primary customer in the same city, Pepsi-Cola. Empty pallets are returned to ANC on its own trucks.

ANC had been using wooden pallets. But after experiencing maintenance costs and durability problems with wooden pallets, the advantages of switching to plastic became attractive. ANC adopted plastic pallets because:

1. Cleaning (removing wood chips, splinters) is no longer a problem.
2. Plastic pallets are made of recycled feedstock.
3. The brand of pallets acquired by ANC are guaranteed for 5 years.

ANC bought plastic pallets from NUCON, 899 Skokie Blvd., Northbrook, IL 60062 (contact Schuyler Pigott: 847-564-3505). ANC has experienced broken plastic pallets only through abnormal use, as when a pallet is struck by a forklift truck. Plastic pallets are assembled in two pieces, a top half and a bottom half that snap together and are fastened with plastic spindles. ANC reports that plastic pallets retain their shape after hard treatment that would crush a wooden pallet.

ANC encountered only one problem during the 2-year period to convert to plastic pallets: identification labels on pallets had to be repositioned to enable sensors to read them. Otherwise, ANC's experience can be summarized as follows:

WOODEN PALLETS PLASTIC PALLETS

1. Initial cost $12 $50
2. Weight 60 lbs. 50 lbs.
3. Estimated life 5 trips 2-3 years*
4. Repair costs $2,000/month $0 - No repair cost
5. Strength Same Same
6. Broken pallets Recyclable Recyclable
7. Storage Some deterioration No apparent effect from when stored outside outside storage

*Pallets have not been in use more than 2-3 years; manufacturer provides a 5-year warranty .

Payback

Although the initial cost of plastic pallets is more than four times the cost of wooden pallets, ANC recovered its outlays in 2 years. A portion of the cost reduction derives from reduced disposal costs: wooden pallet waste amounted to about 2 tons per month. But the largest saving by far was eliminating labor costs of $2,000 per month for repairing wooden pallets. ANC's closed-loop control of its pallets--from can factory to Pepsi, then back to ANC on its own trucks--makes the system work.

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