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News | Nov. 7, 2019

Innovative idea saves DLA Distribution millions in taxpayer dollars

By Ed Shank, DLA Distribution Public Affairs

As the largest Department of Defense distribution facility in the world, Defense Logistics Agency Distribution Susquehanna, Pennsylvania’s 1.7 million sq. ft. mechanized Eastern Distribution Center operates similar to any commercial distribution center in business today.

One thing that separates the government-run distribution center from its commercial counterparts, however, is how money is spent. While commercial facilities are able to make up for financial losses and inefficiencies by passing the cost onto their customers, DLA’s government-run facility relies on taxpayer money to operate. And, in a time of unprecedented budget restraints, it has become more important than ever to spend every dollar wisely. So when a team of employees found a way to save the organization nearly $4,000 per day, DLA Distribution leaders took notice.

“Here in the distribution center most of the pallets we use are called ‘winged pallets,’” explains Tim Frey, base supply supervisor for Distribution, referring to a pallet in which the upper deck of wood extends beyond the supporting boards below. “The reason that the winged pallet is significant for us is because most of our material is shipped to a DoD location and there’s a possibility that it could go onto a ship or it could be sling-loaded and transported by helicopter to a remote site. If we didn’t have this winged pallet that bar would have nothing to grip onto.”

In contrast to the winged pallet, Frey points to another stack of pallets.

“This is a stack of flush pallets,” Frey says, “and this is typically what you see in the civilian world. This is designed to simply hold material, pick it up with a forklift and move from Point A to Point B. A lot of material that we receive here at DDSP is bulk material such as boxes, envelopes, packing material…things like that come on a flush pallet. So what was happening was, we would receive material on a flush pallet, we would remove the material from the pallet and use winged pallets to ship material to non DOD locations. And, at $13 a pallet, this got to be very costly.”

Armed with these facts, Frey and his team set out to find ways to save money by using flush pallets, which were delivered to DLA free of charge with shipments from outside vendors, in place of winged pallets whenever possible. Since the automated cart line system for carrying ultra heavy materials uses the winged system, they set their sights on smaller parcels.

“Our Automatic Weight Offering System section is where our small items come to,” says Frey. “There, a shipping label is placed onto the item and then it goes onto these boxes that ultimately go to one of three [of the largest American commercial] shippers. Before our pallet initiative program, AWOS was using winged pallets for everything and the shippers were simply getting rid of those pallets and they weren’t coming back. We were spending a little over $2 million a year just on winged pallets. What we determined was, we could use a flush pallet in place of a winged pallet for non DoD customers. As a result, we cut our orders in half and we saved about $800,000 a year.”

According to Frey’s teammate, Lisa Schirmer, finance manager at DDSP, the discovery of cost savings with the pallets led them to explore other ways they could save the organization money. That’s when they began to look at what was loaded on the pallets.

“Between the price of the boxes [being loaded atop the pallets] and the price of the wingtip pallets,” Schirmer says, “we estimated we were spending about $3,900 a day just filling up [commercial carrier] trucks. So we changed from using a $30 box to a $7 box, which brought the cost down. Between that and getting this whole pallet recycling program up and running, we’ve saved about $1.3 million total since April.”

According to another member of the pallet initiative team, Gary Gift, DLA Distribution was able to use a portion of the money saved to broaden the organization’s capabilities.

“We hired a full time employee to go around the base, pick up all the pallets, separate them, organize them, repair the ones that can be repaired and put them back in the system,” Gift says. “Part of his training was wood packaging material training. In order for a pallet to ship worldwide it has to be certified, so we trained him on the heat-treat furnace. We’re one of two installations on the East Coast that actually has a wood kiln. So we can take pallets, lumber, boxes, crates…whatever, that are infested with different nematodes, beetles, bugs…heat treat it, kill it all, which then brings it into the WPM standards and compliance and allows it to be reused.”

Gift says finding ways to save money and increase DLA Distribution’s capabilities is part of the culture he and his teammates take very seriously.

“It’s a good way to be great steward of the taxpayer’s resources and their dollars,” Gift says. “That’s part of our oath that we take for our employment here, to be a good steward of the resources of the taxpayer’s dollar.”

Since the implementation of their pallet program, DDSP employees have visited other distribution centers in an effort to save the agency even more money.

“We visited San Joaquin, California and we pitched the initiative to them and they save about half a million dollars as well,” says Frey. “So our initiative has saved the organization a considerable amount of money and will continue to do so as we can identify other areas where they don’t have to use a winged pallet.”