CASE STUDY No. 9709
KEY WORDS PALLETS--REPLACED BY PLASTIC SLIP SHEETS
Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, GA 30339
Contact: Lee Bandlow, Logistics Manager. Tel : 770-433-8211, ext. 84698.
Summary
By converting some of its vendors from shipping on wooden pallets to shipping on plastic slip sheets, Home Depot figures it has eliminated 1.8 million pallets from its retail operations and reduced costs by $660,000.
Action
Home Depot, the largest home improvement retailer in the U.S., has 423 stores nationwide. In early 1995, the Atlanta-based company adopted a new policy requiring vendors to ship products to Home Depot stores on plastic slip sheets rather than wooden pallets. Some vendors were exempt because their products are too heavy or awkward, or are handloaded. After two years' experience, Home Depot made the mandatory slipsheet policy voluntary, citing the high initial costs imposed on some vendors. But the company continues to encourage the use of slip sheets where possible and estimates that they are now used under 10% of incoming freight. Before the slip sheet policy took effect, more than 40% of shipments were on pallets.
Depending on volume, substituting slip sheets for pallets can benefit both the shipper and receiver of freight. Slip sheets (1) cost less than pallets; (2) weigh much less, saving transport charges; and (3) are only a fraction the thickness of pallets, thus increasing cube and improving the efficiency of truck loading. On the receiving end, slip sheets can be reused, typically 8 to 10 times. Home Depot reuses slip sheets arriving at its distribution centers to send products to its stores. When the pull tabs rip and a slip sheet can no longer be used, it is sent to a plastics processor for grinding, melting, and remanufacturing.
Slip sheets work best for merchandise with a heavy uniform case pack--products that "cubeout" well. They have been used successfully by the food and beverage industry for more than two decades.
Payback
Home Depot realized an immediate reduction in freight costs and pallet disposal
costs with the slip sheet program. The company developed the cost analysis (above) to show
the relative cost structure of a typical medium-sized vendor shipping merchandise by
pallets and slip sheets to Home Depot from a single location. The significant barrier to
slip sheets is the initial capital investment (see "Special Handling
Equipment"). The breakeven point is 3,600 loads. For a small vendor, such an
investment may be prohibitive. Home Depot advises other companies interested in slip
sheets to plan on a slow adoption process and expect some initial resistance from vendors.