Identifying Pallet Management Strategies and Improving Warehouse Capacity - A Case Study of the Pallet Logistics at SCA’s Paper Mill in Lilla Edet

Abstract

A rather new area identified by managers as a potential for increasing returns has received great attention. Industry analysts predicts that approximately 450 million EPAL Euro pallets are in constant circulation in the world. Traditionally, pallets have been disregarded and perceived as a source of cost with the single mean to transport products to customers. Lately, actors in supply chains have started to perceive pallets in a total cost approach and, hence, as significant for the overall result of the supply chain. In parallel with an increased attention of the pallets importance on the supply chain performance, a shift towards an increased utilization of pallet pooling systems has been indicated. This is related to the constant increase in raw material prices as well as costs associated with repair, maintenance and recovery of pallets. This study aims to answer two issues. The first issue relates to investigating the pallet logistics process at SCA’s paper mill in Lilla Edet, which includes the mapping of flows to the Danish and Norwegian markets as well as reviewing the design of the pallet warehouse. The second issue concerns evaluating the current inspection control process related to inbound deliveries of pallets. Established standards and routines will be reviewed in order to clarify whether these are complied with. A case study approach has been selected as a method in order to fulfil the aim of this thesis. Since a mixed methods approach is considered useful, both qualitative and quantitative data is collected. Interviews, observations and access to internal documents are the major sources of information. Further, the empirical findings were analysed based on the theoretical framework in order to provide solutions that addressed the stated issues. Improvement suggestions can be grouped in two major measures that should be considered. Firstly, three errors associated with defective pallets are correlated with the temperature. Consequently, during winter months’ pallets should be stored in the pallet warehouse in order to avoid rising defect levels. Secondly, a redesign of the current pallet warehouse should be performed since the current design is not optimal from wooden pallet’s perspective. Further, it should be noted that an increased information sharing between pallet suppliers and the SCA Edet mill is a huge facilitator for improving the studied issues.