IKEA to phase out wooden pallets

Costco is not the only major retailer to take a hard look at its pallet program. Last month, IKEA, the iconic Swedish home furnishings retailer, announced that it will phase out wooden pallets on a global basis. Wood will be replaced with a shipping platform IKEA is calling the material area paper pallet.

“The objectives of this change are to decrease costs and create a more sustainable business by having less impact on the environment,” IKEA explained on its website. “This change will impact all functions within supply chain as well as all stores and suppliers in Europe. For example new handling and storage solutions need to be installed in store racking and supplier plants need to rebuild or adapt the packaging lines in order to use of alternative handling material.”

IKEA has been experimenting with alternatives to wooden pallets for several years now. Modern described how IKEA was using three standard, unique pallets at its operations near Savannah, Georgia as well as the Optiledge, a unique, recyclable plastic shipping platform that makes more efficient use of the space inside shipping containers.

According to a report from Rick LeBlanc of PackagingRevolution, the elimination of wooden pallets will “involve the upgrading of IKEA’s racking storage systems through the company to support unit loads built on paper pallets and the [plastic] Optiledge system.” LeBlanc added that “IKEA believes that it will achieve better fill rates in ocean containers and trucks.” Other reports indicate that IKEA believes it can save $193 million a year in transportation costs.

Both Costco and IKEA are examples of how leading companies are looking beyond the low hanging fruit for the next round of cost savings. They are also examples of the importance of a continued focus on the basics of materials handling that many companies take for granted.