Buying & cost
Audit your pallet spend in an afternoon
The most common finding is not a bad price. It is one site buying pallets while another pays to throw the same pallets away.
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In short
A pallet audit maps what you buy, what you generate, what you dispose of, and what all of it costs — across every site — before anyone negotiates a price. It takes about an afternoon per site plus whatever time it takes to pull historic invoices.
In multi-site operations the audit usually finds the same three things: one grade used everywhere regardless of application, export treatment on domestic lanes, and one site paying for disposal while another buys new.
Why the audit comes before the negotiation
Pallet cost fragments in a way few other line items do. Procurement buys them. Operations handles them. Facilities disposes of them. Finance sees three unrelated entries and nobody sees a total.
That is not incompetence. It is what happens to an item that is individually too cheap to attract attention and collectively too numerous to ignore.
The consequence is that most organisations negotiate the one number they can see — unit price — while the larger numbers sit unexamined in a waste hauling contract and a specification nobody has revisited in six years.
Part one: flows
- How many pallets does each site receive inbound per week?
- How many go out per week?
- How many are purchased, and from whom?
- How many leave and never come back?
- How fast does idle stock accumulate?
- Is any site both buying pallets and paying to dispose of them?
That last question is the one that produces a silence, and it is worth asking of the group rather than of a site.
Part two: specification
- What footprints are in use, and why each one?
- What grade is specified — and by whom, and when was that decided?
- Which lanes actually involve racking?
- Which lanes are one-way and never return?
- Which lanes cross an international border?
- Is any ISPM-15 treated stock being used domestically?
- Does the load overhang the deck, or is the deck oversized for the load?
The grade question is usually the biggest single saving. Racking needs Grade A; floor stacking and one-way shipping do not, and the gap is 20–30%.
Part three: cost and structure
- Delivered unit cost by footprint and grade, by site
- Annual spend on pallet disposal or waste hauling
- Expedite and rush charges over the last twelve months
- Whether freight is quoted separately or buried
- Product damage attributable to pallet failure or overhang
- Number of suppliers, and how many price points across them
- Whether ordering is scheduled or reactive
- Whether any site could pair delivery with collection on the same truck
Damage is the one people leave out, and it is frequently larger than the entire pallet spend. A single crushed pallet of finished goods can exceed a month of pallet purchasing.
What to do with the answers
Rank the findings by size, not by ease. In our experience the order comes out something like this:
- Stop paying to dispose of an asset — see sell us your pallets
- Split grades by application
- Build a two-way lane where geography allows
- Remove export treatment from domestic lanes
- Right-size any footprint causing overhang
- Move from reactive to scheduled ordering
- Then, last, negotiate the unit price
The full ranked list with the reasoning is in eleven ways to cut your pallet spend. We run this audit at no charge when scoping a managed programme, and it quite often concludes that you do not need one.
Takeaways
- Pallet cost fragments across departments, so nobody sees the total.
- Grade splitting by application is usually the largest specification saving.
- Product damage from pallet failure is frequently larger than the pallet spend itself.
- Negotiate unit price last, once the structural findings are addressed.
Questions
Asked and answered
How long does a pallet audit take?
About an afternoon per site for the observation work, plus however long it takes to pull historic invoice data — which is usually the slow part.
Do we need a supplier to run one?
No. The questions are the whole method, and knowing your own numbers before you talk to any supplier is the strongest position you can negotiate from.
Written by
Priya Raghunathan
Operations & Programs
Builds the multi-site pallet programmes and does the baseline audits. Keeps the spreadsheets everybody else quotes from.
Disagree with something here? That is genuinely useful to us — several of these articles exist because a customer told us we had it wrong. Use the form at the top of the page or write to the yard directly.
Terms used here
Definitions live in one place so they cannot drift. Full list in the pallet glossary.
- Grade A
- A used pallet with original unrepaired stringers, seven or more top deck boards and no significant damage. Also called #1.
- ISPM-15
- The international standard governing treatment and marking of wood packaging in international trade.
- Overhang
- Load extending past the deck edge. Reduces carton compression strength at the corners and causes crush damage.
- Two-way lane
- A route where a truck delivers pallets and collects used cores on the same visit.
Keep reading
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