CHEP USA

If you're a food manufacturer on the West coast, your product can be on retail shelves on the East coast for a pallet fee of just $5 to $8. The same is true for manufacturers in the home improvement and hardware, beverage, and food service industries. Other industries that are beginning to reap the same advantages are the automotive after-market, office supplies, and electronics.

Don’t say, “It ain’t so,” because it is so. Just ask the marketing department of CHEP, which originally stood for Commonwealth Handling Equipment Pool. Dating back to Australia at the end of World War II, CHEP now boasts business in 36 countries, crossing six continents, and controlling more than 134 million pallets and 20 million containers.

After the war, the Allied forces left heavy equipment - pallets, containers - in Australia, not wanting to incur the expense of moving the material. The Australian government began to use the equipment for its own purposes and business. It started CHEP which it owned until 1958 when Brambles Industries, Inc, a private Australian company in Sidney, acquired it. In 1974, Brambles embarked on global expansion specifically into Europe, where it established a joint venture with GKN of London. In 1990, the company launched its services into the United States.

Today, CHEP is still a publicly traded joint venture. GKN is on the London exchange; Brambles is on the Sidney exchange.

By supplying a diverse range of equipment pooling products, today, CHEP is the global market leader in providing these highreliability, fast-turnaround, and extremely cost-effective pooling services to industry. It originated the concept of materials handling distribution services for industry, based on the pooling of a variety of products. A pool refers to the use of a common inventory of pallets across companies and product lines on a reusable basis.

It is an attractive strategic option for companies that want to focus on their own business. By outsourcing materials handling equipment to a specialist-pooling operator, supply chain management can be more effective. CHEP takes responsibility for developing, purchasing, and maintaining equipment as well as providing control and management systems. The company also provides asset tracking and control systems for all its pooling equipment.

“There really is no alternative to equipment pooling,” says Brian Beattie, Senior Vice President for CHEP USA. “Take companies like Procter & Gamble, Kraft and Kellogg. In order to get the product to the retail distribution center, the company would have to pay people to put the boxes on a pallet to be shipped to a distribution center in Chicago, for example. The product then needs to be offloaded by hired help and the boxes of cereal need to be put on a shelf for the consumer, another expense. The pallet would then be dumped into a landfill, or the company would have to hire a trucking company to take the pallets back to the manufacturer.”

CHEP facilitates the entire process. It introduced a higher quality pallet that is shipped to a distribution center. After the products are off-loaded, the pallet is returned to one of the 150 local depots in the United States, where CHEP takes over again. The pallet is inspected, restored to its original specifications, and sent out to another manufacturer. It is, literally, like renting a car at one location and dropping it off at a different one.

“The pallet could begin the supply chain in Michigan, for example, end up in a Wal*Mart, a Kroger, or Target in Chicago, from one manufacturer’s use; then go on to another manufacturer in Chicago and eventually arrive at a distribution center in California,” says Beattie. “It’s a never-ending cycle.”

CHEP specializes in applications for the food industry including produce and meat. “The logistics are very important,” emphasizes Beattie. “We have to get a trailer-load to customers when they want it. That’s a key benefit we provide. Perishables are particularly demanding. Lettuce, apples, other produce, and meat need to go through the supply chain quickly. The cost to our customers is minimized because CHEP’s customers pay per day.”

For these perishables, Returnable Plastic Containers (RPC), available in seven sizes, are used. CHEP first supplies the RPC to a tomato grower, for example, who picks the tomatoes and puts them directly into the RPC, which is shipped to a Wal*Mart Distribution Center, for example. The RPC is then put on the shelf, from where the consumers choose what they want. No one else needs to touch the tomatoes. When the container is empty, it goes on to a pallet. When the pallet is full of RPCs, it goes to a CHEP depot, where it is inspected and sanitized. The process starts all over again for the next grower.

It is a smooth and cost-effective system that stops the need for the alternative, corrugated boxes, which have to be recycled or thrown into a landfill. “Our containers are better for the environment and more efficient for the supply chain because they reduce the overall cost and labor,” says Beattie.

Two other established industries for CHEP are the beverage and food service industries. Beverages - soda and bottled water - get where they need to be because of CHEP. Food service is a three-step distribution process.

“A manufacturer like Kraft has to get the inventory to a distribution company, like Sysco, and then it has to be shipped to restaurants or fast-food outlets,” explains Beattie.

The automotive industry is in a separate class of its own. For that, CHEP uses plastic or metal containers more often than pallets. Automotive industry suppliers put component parts in the containers and ship them ‘just in time’.

As modern supply chain management demands, all automotive assembly plants need supplies JIT to eliminate idle storage. As an example, DaimlerChrysler, the German automobile manufacturer that bought Chrysler two years ago has a facility located in the Chicago area. It wants the component parts only an hour or two before a car is put together. “When you have inventory sitting, it costs money, both in storage space, and the inventory itself,” says Beattie.

In the same vein, the automotive after-market is an emerging one for CHEP. This industry is, literally, a store for automotive parts. What CHEP helps facilitate is pallet load shipment of materials from manufacturers to the automotive retail store. “It’s a unique market because these parts are shipped to the mass merchandisers, as well.”

Another emerging market for CHEP is the office supply industry. Hewlett Packard products, like printers and paper, can be shipped into Walmart, Costco and K-mart. Similarl1y, within the electronic industry, PCs, printers, and so on are shipped to the same mass merchandisers.

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