One of the most common questions we hear from new customers is: "How many pallets do I need?" Over-ordering wastes money and storage space. Under-ordering causes production delays. Here's a straightforward formula to get it right.
The basic formula: Monthly Pallet Need = (Monthly Outbound Shipments × Pallets per Shipment) + Safety Stock. This gives you a starting point that accounts for normal operations plus a buffer for variability.
Step 1: Count your monthly outbound shipments. This includes all pallet-level shipments leaving your facility — to customers, to other facilities, to retailers, everything. Review 3-6 months of shipping data for accuracy.
Step 2: Determine pallets per shipment. Some shipments use one pallet, others use twenty. Calculate your average. If your shipment sizes vary significantly, break them into categories (small, medium, large) and calculate each separately.
Step 3: Add safety stock. We recommend 15-20% above your calculated need. This buffer covers unexpected orders, seasonal spikes, pallet damage and loss, and supplier delivery timing variations.
Step 4: Subtract returns. If you're in a return-pallet environment (pallets come back from customers), factor in your return rate. If 30% of your pallets come back usable, your net procurement need drops accordingly.
Example: A mid-sized distributor ships 400 orders per month, averaging 2 pallets per order, with a 25% return rate and 15% safety stock. Need = (400 × 2) × 0.75 × 1.15 = 690 pallets per month.
At Riverside Pallet Co., we help new customers run this calculation and can analyze your shipping data to provide a precise recommendation. Our managed programs automatically adjust delivery quantities based on your actual usage patterns.