Five ways asset tracking cuts the cost of lost cages, stillages and pallets

In the automotive sector, Deloitte has estimated that roughly 15% to 20% of pallets and lids are lost each year. Tracking each unit with a small tag fixes that, and the savings show up in five places.

Manufacturing supply chains depend on equipment that rarely gets much attention: the roll cages, stillages, pallets and containers that carry parts and products between suppliers and factories. They are designed to be reused, but a large share never comes back.

In the automotive sector, Deloitte has estimated that roughly 15% to 20% of pallets and lids are lost each year. Once those losses are replaced, the cost of keeping a returnable pool topped up can start to rival the cost of the single-use packaging it was meant to replace.

Most of this comes down to not knowing where things are. A stillage that leaves the factory gate tends to drop off the radar until it turns up again, if it turns up at all. Tracking each unit with a small tag fixes that, and the savings show up in five places.

1. Showing where assets are being held

The first saving comes from knowing where the missing equipment actually is. In most cases it hasn’t gone far. It’s in a supplier’s yard, or at the back of a customer’s warehouse, a few weeks past the date it was due back. A small tag on each cage or stillage reports where it is, so the manufacturer can see which sites have their kit and how long it’s been there.

That gives the logistics team names and addresses for the missing stock, whereas before they only had a feeling the pool was running low. They can ring the partners sitting on the most kit first and send a wagon round the sites in a sensible order, collecting from several in one trip.

2. Giving evidence to recover or recharge

Tracking also helps manufacturers get money back for equipment that partners hold on to. Most supply contracts include a clause allowing the manufacturer to charge for returnable packaging kept beyond an agreed period. Hardly anyone uses it, though, because the supplier will dispute any invoice that isn’t backed up, and it’s hard to prove how long a cage has been sitting in someone else’s yard. A dated location trail for each stillage, showing when it arrived and how long it stayed, gives the commercial team that proof.

Often the evidence is enough on its own. Once partners know that idle times are being monitored, they tend to send equipment back more promptly, and the charge never needs to be raised.

3. Buying fewer replacements

The third saving is on new packaging. When returnable stock runs low, the usual response is to order more, but without tracking it’s difficult to tell whether the pool really is too small or whether a large share is simply sitting idle elsewhere in the network.

With location data, manufacturers can count how many items are in circulation before placing an order. Recovering equipment the business already owns is almost always cheaper than buying new, particularly for specialist stillages that are built around one component and can’t be bought off the shelf.

4. Spotting unauthorised movement early

The fourth problem tracking deals with is theft, which accounts for some of the cages that never come back. Steel stillages fetch decent money as scrap, and it’s unlikely anyone will ask where a pallet came from. Manufacturers can draw a geofence (a virtual boundary) around each approved site, and they’ll get an alert as soon as a tagged unit leaves, which is usually the only chance of getting it back.

The sooner that movement is spotted, the better the odds of recovery. Over time the alerts also show where in the supply chain items tend to go missing, so the problem can be raised with the right partner.

5. Keeping production lines supplied

The fifth way tracking saves money is by protecting production. If the right stillages aren’t available when components need to be shipped, parts can’t move and production lines can be held up. Some manufacturers guard against this by keeping a large buffer of extra packaging, which ties up capital and floor space.

Tracking takes a lot of the guesswork out of this. Planners can see where each item is and how quickly it’s cycling back, so the buffer can be cut down without putting supply at risk. And if returns from a particular route start to slow, they’ll know about it before it becomes a shortage on the line.

Where to begin

Manufacturers who want to make these savings can start small. Most begin with their most expensive or hardest-to-replace items, such as custom stillages, or with the routes and partners where losses are highest. Even a sample of tagged items can show how long equipment spends at each site and where the biggest leaks are.

Once that picture is clear, manufacturers can focus recovery efforts where they will have the most effect, and order new packaging only when the pool genuinely needs it.

Peyman Khosravani

Industry Expert & Contributor

Peyman Khosravani is a global blockchain and digital transformation expert with a passion for marketing, futuristic ideas, analytics insights, startup businesses, and effective communications. He has extensive experience in blockchain and DeFi projects and is committed to using technology to bring justice and fairness to society and promote freedom. Peyman has worked with international organisations to improve digital transformation strategies and data-gathering strategies that help identify customer touchpoints and sources of data that tell the story of what is happening. With his expertise in blockchain, digital transformation, marketing, analytics insights, startup businesses, and effective communications, Peyman is dedicated to helping businesses succeed in the digital age. He believes that technology can be used as a tool for positive change in the world.