Pallets, ubiquitous throughout our economy, have been an early example of the potential for a circular product system, with reusable, pooled pallets reducing waste in logistics. For decades, wood has been the dominant pooled pallet material. While a natural, renewable material, wood can break, is porous and can create worker safety issues from handling. With roughly 10 billion pallets in circulation, there remains a significant opportunity for improvements.
Pallets, ubiquitous throughout our economy, have been an early example of the potential for a circular product system, with reusable, pooled pallets reducing waste in logistics. For decades, wood has been the dominant pooled pallet material. While a natural, renewable material, wood can break, is porous and can create worker safety issues from handling. With roughly 10 billion pallets in circulation, there remains a significant opportunity for improvements.
Designing with purpose
When RM2 entered the market, the company sought to develop a more durable reusable pallet made from composite materials. While longer lasting, composite pallets cost more to produce. RM2 worked with our firm, Pure Strategies, to integrate life cycle assessment (LCA) into the design of its innovative BLOCKPalTM product. Noting the industry rule-of-thumb that more than 70 percent of a product’s environmental impact (as well as cost) is locked in during the design stage, RM2 wanted to capitalize on insights from the LCA to guide its product development.
Pure Strategies’ peer-reviewed LCA helped RM2 pinpoint design levers to reduce BLOCKPal’s environmental impact by focusing on pallet weight, durability (number of trips a pallet can make during its usable life), and loss rate (how many pallets are lost between destinations).
AT&T’s LTE-M enhances recovery
With one set of hurdles cleared, RM2 had to face another set of challenges. In a pooled system, the pallet manufacturer (RM2) retains ownership and tracks each pallet between destinations. A small percentage of pallets are typically lost during normal use. Lost pallets require replacements, which increases cost, resourceusageand greenhouse gas emissions.
Designing for Circularity-Friendly Behaviors
Join us as leaders from BBMG and REI examine how leading brands are innovating and scaling circular models to attract new fans and earn customer loyalty, all while eliminating waste — Thurs, May 9, at Brand-Led Culture Change.
Enter RM2’s collaboration with AT&T: RM2 provided a unique pallet tracking solution that addressed this challenge called RM2ELIoT, which pairs the pallets with AT&T’s LTE-M Low-Power Wide-Area network. This approach allows for wireless tracking in areas difficult to monitor, such as inside warehouses, in underground storage areas, in remote locations, or en route on trains, trucks or trailers. While there are other pallets on the market with tracking systems, they have historically been limited to users physically scanning the pallets at each step in the delivery process. AT&T’s LTE-M network eliminates the need for manual scanning.
As Mobeen Khan, Associate VP of Strategy and Product Management for AT&T IoT, points out: “A connected pallet unlocks the economic and environmental benefits of reusable pallets by empowering users to maintain oversight of inventory to prevent loss, and by obtaining new data from segments of the supply chain that were previously invisible.”
Cost benefits under this circular, lightweight, durable and connected approach add up. Connectivity lowers labor costs for hunting down missing pallets, repossessing them, or finding replacements. Connected pallets also provide valuable information on how product moves through the value chain, enabling insights and analytics to identify potential efficiencies. According to RM2,its connected pallet can be used at least 162 times before it reaches its end of life, with a cost per trip up to 20 percent lower than non-reusable alternatives. Pure Strategies estimates that to complete 100,000 trips, it would take 4,400 wooden pallets compared to 900 BLOCKPals, owing toBLOCKPal’s durability and traceability.
In this study, the design improvements informed by Pure Strategies’ LCA, combined with the RM2ELIOT’s tracking system, reduce carbon emissions by 1.4 million pounds for every 1 million pallet trips, compared to traditional wooden pallets. This represents a potential 21 percent reduction in carbon emissions compared to using traditional wooden pallets for these trips.
Connecting to AT&T’s 10x goal
AT&T has a goal to enable carbon savings 10x the footprint of its operations by enhancing the efficiency of its network and delivering sustainable customer solutions for its customers by 2025. To meet this goal, AT&T is engaging with customers and leveraging technology partners to implement and scale up carbon-saving solutions. RM2Eliot-connected pallets represent one example of how AT&T is enabling progress towards this goal.
A circular future
To increase longevity, RM2 provides repair kits to customers. The units can be refurbished multiple times with broken component parts being replaced with new ones. And at end of life, the composite material from the pallets could be reused in building materials or other durable goods.
Published Jul 25, 2017 10am EDT / 7am PDT / 3pm BST / 4pm CEST
Co Founder and Managing Director
Pure Strategies
Tim Greiner is Pure Strategies' co-founder and Managing Director.