About Kim Hiap Lee
Kim Hiap Lee (KHL), a small and medium enterprise (SME) and a subsidiary of LHT Holdings Limited was established in year 2000 as a local leading pallet pooling company. It leases its green ECR pallets mainly to the Fast Moving Consumer Goods (FMCG) industries who use them to transport cartons of their grocery goods to the distribution centres (DC).
Participation in ECR Pallet Standardisation working group
In 1999, the Association SPRING Singapore and Efficient Consumer Response (ECR) initiated the Pallet Standardisation project to address the issue of physical standardization. In cooperation with the pallet community, it aimed at limiting the number of differing pallets used in Asia. After the project had been conducted, recommendations were made to the Fast Moving Consumer Goods (FMCG) industry to adopt a 4-way pallet standard with 1000mm x 1200mm in dimensions. Standardisation for pallet sizes results in economy of space and facilitates automation such as “Automated Storage & Retrieval System (ASRS)”, as well as reduction of unloading time and warehouse storage costs. In addition, there is also reduction of damaged goods losses through minimal handling, reduction in the number of transportation trips and minimization of the wastage of pallets.
What is ECR Pallet?
ECR is a strategy to improve consumer choice, satisfaction and service and at the same, reduce total costs, inventories and physical assets. ECR requires distributors and suppliers to focus jointly on the efficiency of the total grocery chain, rather than the efficiency of individual components.
The design specifications for the standardised pallet conforms to ISO 6780 which specifies the principal dimensions and tolerances for flat pallets for intercontinental materials handling and to SS 334:1998 Singapore Standard for Specification for Timber Pallets.
KHL Pallet Pooling
In 2000, LHT set up a new pallet pooling business called Kim Hiap Lee Co. (Pte) Ltd whose core business is the rental of standardised wooden pallet called “ECR Pallet”. They conducted a feasibility study on the benefits and advantages of standard-sized wooden pallets in the FMCG industry and re-engineering that will help streamline the Global RFID-enabled supply chain.
The aim of this research project is to analyze the ECR standard pallet and its strategic role in the FMCG industry. It also aims to explain the pallet pooling system which manages pallet assets, its effective usage and eventually, cost reduction in the supply chain. Ultimately, the pallet pooling system helps save trees by recycling of the pallets.
An organized pallet pooling system with strong processes and respected disciplines is the best option to manage pallet assets and its effective usage. It will be used to standardize materials management, control assets, ensure pallet quality and deliver the most effective mechanism for moving goods within the supply chain. By definition, pallet pooling within the total supply chain relationship implies that those who “touch and manage” pallet assets have a material impact on the efficiency of a collective system of asset utilization, and ultimately on the supply chain costs and costs to the end-consumer.
This total integrated supply chain implies 3 partners
- The pallet pool provider
- The manufacturers
- The distribution centres / retailers
Usually, the physical link between these partners is through a logistics service provider or carrier.
The pallet pool provider:
- Owns the pallets
- Is responsible for the management, supply, collection, inspection and repair of the pallets
- Receive pallets according to needs
- Dispatch goods to retailers on good quality pallets
- Usually support the cost of pallets based on use (movements and time)
- Receive pallets from the manufacturers
- Accept/ help (sort) the pallet pool provider to collect the pallets
It is generally recognized that a pallet pooling system with advantages which accrue to all players can only work efficiently and cost-effectively if the partners collaborate and share the responsibility of assets control, pallet quality and fast rotation of the assets. Any loss or damage to the pallets, leads to inefficiencies and higher cost of the total supply chain, which will ultimately affect consumers.
LHT Holdings (Singapore) Limited was one of 35 companies that were part of the ambitious project which started in 1998 to reduce supply chain costs and increase productivity in the FMCG industry through standardisation of pallet sizes.