Pallets are often seen as expendable. But Chep  has a different business model—spend a little more today for a durable pallet, and save money tomorrow by using it over and over again.

To test the theory, the company is tracking 250,000 pallets within the state of Florida, says Deb Spicer, Chep's vice president of corporate communications. Each one has a radio frequency identification (RFID) tag underneath its front and rear lead boards. Tag readers at inbound and outbound dock doors read the tags, tracking pallet movement through the supply chain.

The pallets belong to 34 manufacturing companies, that collectively send them to 2,000 different locations, she says. The test, which started in June 2002, runs through this month. It will produce data on three aspects of pallet usage: the operational impact of tracking pallets; the variability of the pallet pool dynamic (based on number of turns and amount of dwell time); and cost savings at distinct points in the supply chain. Chep expects to release the results next month.