Loading Equipment Administration
… a topic so dull, that only the German language has a real name for it (Lademittelverwaltung)…..
The thing is, that if you work in logistics, or even procurement, you will have had run-ins with LEA, most of you probably consider it a necessary evil, some of you are comfortable on how you handle the topic within you logistical organization… and a very small elite few of you, know how to make a profit on LEA.
So before we get deeper into the subject of LEA, let me quickly explain, what Loading Equipment can be.
- The Pallet
- The Pallet is the first thing you think about when somebody mentions Loading Equipment. That also makes sense, as roughly 80% of companies out there, only have had experience dealing with Pallets. For most, that is more than enough.
- The Pallet cage, Lattice box, or skeleton container
- Lets put our hands together for the automotive sector for introducing us to the Pallet cage! Imagine a cage welded on to a pallet. As fun to administrate as the standard pallet above, just exposing you to a way bigger financial risk, as Pallet cages cost 8 to 10 times more than a pallet!
- So lets level up in difficulty and talk Meathooks. The common loading equipment for transport of hanging meat in reefer trucks, Meathooks are not only as expensive as the Pallet cage above, they also need to be cleaned after each use, meaning that transporters need to calculate extra time and costs to look for a facility that provides this. I did this for 2 years; you cannot even imagine the fun times had….
… and last but not least:
- 100+ other equipment that are exchanged within some specific industries.
- Here is the thing… I will admit that during my time doing logistics on both sides of the table, I hated Loading Equipment Administration. It took me years to develop processes that ensured, that companies I worked for, didn’t lose money on equipment. To be honest… although I had people working full time administrating LEs, and even had a complex system of 5 different Excel sheets, to support this task, I never managed to reduce the level of missing equipment to less than 3% of items turned over. That means I was at least losing 5 items for every 100 we turned… By Pallets that could be 30 Euros, by Pallet Cages it could be 300…
Basically, by entering one of these “communities” of companies exchanging equipment, you are locking yourself into a world of constant monitoring and booking. Very few companies enter this on their own accord, they are mostly forced into this be a customer or a supplier. The German auto manufacturers are the best example of this. If you find yourself as part of one of these supply chains, you are 100% participating in some kind of exchange system of loading equipment, and its because you are contractually obligated to do so.
The truth is, “sharing” Loading Equipment makes a lot of sense, and in these times where we are fighting abundance of packaging, the exchange becomes a very intelligent and cost-efficient way to reduce waste. The reason why these methods are unpopular, is basically just framing, mindset and our own constructed complexity.
When I was a Trainee at a midsized Danish logistics company, I was like all other Trainees asked to administrate Loading Equipment. It was not because I was good at it (quite frankly…. I was terrible). It was purely because nobody else wanted to do it. Back then it was considered tedious, boring and a waste of the Forwarder skillset. But what happens if you put trainees to administrate a rather complex exchange system of pallets, and in my case, back then, also Meathooks? Out of no fault of their own, the trainees will, barring some weird natural talents, fail. The failing will be costly, automatically the system is made even more complex to help future loss, the excitement of the task does not get better, and again the next wave of trainees are put to the, now even more complex task, of administrating LEs. Recognizing a pattern here…
How one company recognized the LEA spiral of doom and flipped the script!
During the last financial crisis, one company did exactly the opposite. The company that starts with S and ends with -chenker, recognized that the spiral of LEA doom was a huge financial black hole, so they gathered their most talented forwarders, paid them significantly more and put them to administrating Loading Equipment. It has to be noted, that they did not do anything to make the system less complicated, they instead made sure that their newly formed taskforce became masters of the complexity… and this all for a reason.
Imagine if you where the only seeing person in a world of blind people, well for some time the abovementioned company was in fact the only seeing person.
The LEA Taskforce started using questionable but not illegal methods to gain upper hand on their own customers and other logistic companies. Within few weeks the LEA Taskforce starting profiting on their methods. The experiment was going so well, that the company setup hundreds of these taskforces.
Quickly other logistical companies and major industrial corporations where using the same methods, headhunting LEA experts to setup their own Taskforces, still keeping the Loading Equipment Administration complex, again gaining hand on the companies that never setup their own LEA Teams.
Digitalization, leveling the playing field!
Although still not widely spread, there are solutions, that address the complexity of Loading Equipment Administration. This means that companies that did not have the access to expert LEA know-how, now can counter the pressure from the ones that have the access. Simple Software as a Service Solutions, that make LEA understandable.
I used to be a Head of Logistics for a midsized manufacturer of luxury consumer goods, meaning that I also had to deal with Loading Equipment Administration, I learned some of the methods introduced by this one German logistical giant, just enough to defend my budget against hemorrhaging money on pallets, but never enough to gain the upper hand.
I spent years looking for a cool and simple digital solution to implement, So it was ironic to, that I met Stephan from Poolynk 2 weeks after I started at adoptr.
Poolynk is the solution I was looking for, a simple SaaS solution, that can be implemented within hours.
So we agreed on a cooperation with Stephan to help level the playing field for small and midsized companies, when it comes to Loading Equipment Administration.
Within days adoptr will help you setup a fireproof LEA process, build on Stephans Poolynks SaaS solution.
I know you LEA is not a fun topic to talk about… so let’s get this done!… and you will never have to talk about it again.