IKEA switches from timber to cardboard pallets
Anybody who’s ever been in an IKEA warehouse knows all too well the familiar sights of wooden pallets stacked dozens of feet high. While the furniture giant’s inventory management strategies aren’t changing, the materials used in the pallets are.
According to multiple reports, IKEA is replacing its traditional timber shipping pallets with lighter and cheaper corrugated cardboard platforms. The best part is that the eco-friendly switch won’t come at the cost of functionality, as the corrugated cardboard pallets and wooden pallets both support weights up to 1,650 pounds.
“We don’t know if the paper pallet will be the ultimate solution, but it’s better than wood,” Jeanette Skjelmose, sustainability chief at IKEA’s supply-chain unit, told Business Week.
IKEA uses 10 million pallets to help the company make shipments to its 287 stores in 26 countries worldwide, so making the switch to something more recyclable makes ecological sense. It also makes financial sense, as the Business Week report notes that the switch will cut transport costs by roughly 10 percent.
SEE OTHER TOP WAREHOUSING STORIES IN THE SUPPLY CHAIN DIGITAL CONTENT NETWORK
Those transport cost reductions are partially attributed to the lighter weight, as IKEA’s new corrugated cardboard pallets, at just 5.5 pounds, are 90 percent lighter than its timber counterparts. The new pallets are also smaller at just two inches high, which means IKEA can cram more pallets into shipments and further save on its own shipping costs.
“We hope this will be a start in making transportation systems smarter and freight as compact as possible,” Skjelmose says.
Some are more skeptical to the savings IKEA will inherit thanks to the pallet switch. Jeff McBee, a pallet analyst at Industrial Reporting, told Business Week that a switch to corrugated cardboard pallets might not bring the savings the company is predicting.
“This obviously looks good to IKEA on paper, but I’d like to see what they say a year from now,” he said. “I’m not necessarily skeptical, but [the cost savings] may be closer to a wash than they suspect.”
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.