The report is the result of a six-month joint research project undertaken by CAITEC, in conjunction with CHEP China, that analyses the FMCG supply chain in China and the role that standardization and pooling of supply chain equipment such as pallets can play as a means to improve operational efficiency and lower the cost of logistics.

The joint CAITEC-CHEP report begins with an overview of the current status, challenges and trends in the FMCG supply chain in China and includes a detailed cost analysis of a number of logistics scenarios based on pilot projects and case studies, before recommending practical actions to support the Government’s aim of standardized and more-efficient supply chain management.

Commenting at the launch event, President of CHEP Asia Pacific, Phillip Austin, said, “CHEP applauds China’s Ministry of Commerce for its vision and leadership behind these first steps towards standardization and the adoption of the dynamic flowing supply chains. This has the potential to accelerate industry development in China and lower the currently high cost of logistics as a percentage of GDP. It is with this same spirit that MOFCOM already acted decisively last year to declare 1.2m x 1.0m as the standard pallet specification.”

In his speech, President of CAITEC, Gu Xue Ming, remarked, “As logistics optimization becomes more important and gets increasing attention from the government and companies, the Chinese government think tank – CAITEC – has carried out a six-month, deep-dive research project together with CHEP China. We sincerely hope that the analysis provides practical suggestions for better ways of working and more-efficient supply chain management.”

Recommendations

The opportunities and recommendations put forward by the report include the potential for government to help accelerate the development of standards for pallets, transportation vehicles, facilities and other equipment through the use of policies and financial incentives; and also to promote good practices and educate stakeholders. Industry associations have a role to play in the areas of regulation, training, promotion and coordination. The report encourages companies to take an overall view of the supply chain and look for ways of collaborating with other participants and with pallet pooling companies. Other practical recommendations for companies include upgrading equipment and facilities to national standards, adapting standard processes and prioritizing lanes to facilitate palletized delivery, adjusting order sizes to full pallets, and investing in forklifts and related equipment.

John Wan, President of CHEP Asia, said, “CHEP China is fully committed to using the global supply-chain solutions expertise of the Brambles Group to better serve its customers and benefit all stakeholders in the supply chain as we take this journey towards new ways of working together. It is an honour for CHEP to collaborate with CAITEC on a report of this quality, and to play an active role in MOFCOM’s Special Action Plan for Standardization of Commercial Logistics.”

In support of the Special Action Plan, CHEP continues to work with local Commissions of Commerce and companies in several pilot cities to promote logistic equipment standardization.

Austin added, “We are also grateful for the participation in the research of leading manufacturers - P&G and Nestle; retailers and distributors – Walmart, CRV, Wu-mart and Chaopi; and third party logistics provider – Sinotrans Logistics. This cross-industry collaboration is a fundamental ingredient for supply chain efficiency and has led to a number of ‘real-world’ case studies being included in the report.”

CHEP began its operations in China in 2006. Since then, CHEP China has invested in a network of over eighty on-site customer service points and service centres, and owns and manages a pool of more than 4 million pallets, for the benefit of its customers. The pallets are then used by customers to transport their goods to market.

The company’s customers include both multinational corporations and local Chinese companies across the FMCG, beverage, retail and general manufacturing industries. CHEP also delivers solutions to original equipment manufacturers in China’s automotive sector for the transport of auto parts.