Leading Swedish grocery chains Coop, Dagag and ICA represent a large segment of Sweden’s grocery store operations. The traditional white exchange pallet system has produced challenges for the grocers and for their suppliers due to the inconsistent quality of white wood pallets, which pose handling risks and can result in product damage. Plus, the cost to buy white pallets had been steadily rising.
BUSINESS NEED – The grocery chains needed to streamline their supply chain operations and lower overall costs in order to keep store prices in line with customer expectations. They also wanted to improve their sustainability positions by lowering the carbon footprint of their supply chains through reduced waste going to landfills.
SOLUTION – A CHEP managed pooled pallet solution was selected by all three companies to replace white exchange system pallets with high-quality CHEP pallets and superior customer service. The grocers chose to inspect the pallets themselves at their locations to eliminate the need to return them to a CHEP service centre. Only pallets needing repair would be trucked to a service centre.
BENEFITS – Since the switch to CHEP, transport costs have fallen as have costs for pallet inspection, repairs and purchases. The grocers have reduced their CO2 emissions from transport and processes and have seen a dramatic reduction in the amount of waste destined for landfill. Supply chain efficiency has seen a marked improvement and overall supply chain costs have decreased.
Leading Swedish Grocery Chains Switch to CHEP Pooled Pallets
CHEP, the world’s leading provider of pallet and container pooling solutions, is pleased to announce that three leading Swedish grocery chains – ICA, Dagab, and Coop, have signed contracts for a managed pooled pallet solution to improve supply chain efficiency and reduce overall supply chain costs over white exchange pallets, while adding sustainability benefits.
In its simplest form, equipment pooling (e.g. a pallet pool) is the shared use of high quality standard pallets and containers by multiple customers who collectively benefit from the network scale of the pool, versus trying to manage reusable equipment individually.
Pooling is a strategic business option for companies that want to reduce capital expenditure and improve day-to-day supply chain operations. CHEP’s pooled pallets also offer opportunities for customer to reduce their carbon footprint for improved sustainability, owing to CHEP’s business model of pallet repair, reuse and recycle.
Under the agreements with the Swedish grocery chains, Coop, Dagab and ICA will be responsible for the inspection of the pallets and associate costs, eliminating the need to return them to a CHEP service centre for inspection. That cuts out one transport leg, reducing greenhouse gases and pallet management costs for suppliers, mainly FMGCs companies which are now much more interested in adapting the CHEP pallet pooling system.
The three chains represent a large segment of Sweden’s grocery store operations. ICA Sweden is the leading grocery retailer with more than 1,300 stores and a market share of around 36%. Coop Sweden operates grocery retail and internet operations, claiming 21.5% of the market. Dagab is a wholesale subsidiary of Axfood AB, which operates retail and wholesale outlets throughout Sweden, with a chain of 258 stores, also collaborating with 820 proprietor-run stores.
Anders Endertorp, Logistics Director at the Axfood unit of Dagag Group, says: “The benefits of the CHEP pallet pooling system are clear to us and to Coop and ICA. We see it as a way to reduce capital expenditure over exchange pallets and to improve day-to-day supply chain operations. CHEP provides a strong, well-designed pallet for ease of handling that grocery retailers can appreciate. We intend to promote pooling to our suppliers as a better alternative, since it results in lower costs for wholesalers and suppliers, alike.”
“The CHEP program takes us out of the pallet ownership business and provides us with quality pallets in the amount that we need and gives us service that we can rely on,” he continued. “With pooling, the cost picture becomes much clearer than with exchange pallets. The CHEP program is open and transparent, plus with CHEP’s business model of continuous pallet repair and reuse, our sustainability positions are much improved.”
Örjan Thönners, Sales Manager of CHEP Sweden, says: “Our CHEP solution provides pallet and pallet management as a service, eliminating our customers’ need to purchase, maintain and manage pallets. That results in a streamlined supply chain and an overall reduction in supply chain costs. It also means less waste going to landfills for improved sustainability.”