A wide range of various Hershey products and packages are shipped on pallets stacked 2-3 high. The types of packages range from cans to plastic bottles, flexible bags ,various types of paper cartons and cardboard cases. The weight and strength of package vary by product and pack type. Product categories include chocolate, confectionery, pasta, syrups and toppings, aseptic beverages, and baking products.

A typical pallet of product begins in the plant shipping department and then goes to a regional warehouse or distribution center where it may be put on different pallets and combined with other products going to the same distributor or customer warehouse. At the distributor or customer warehouse the pallet might be broken down and cartons of product combined with other products on yet another pallet to complete individual retail outlet orders. When the pallet reaches the store or retail outlet it is again stored in a storage room until opened for placement on the store shelves.

Although the product is out of Hershey's control once it leaves our distribution warehouses we guarantee the customer that the product is in perfect shape or we replace it with new product or give a sales credit if it is damaged before it reaches the consumer.

We would like to reduce damage to save direct dollars and improve customer service. The difficulty is that we do not have a method to measure damage or determine the cause of damage. Our sales force will document incidents but it takes time and training to assess and document the cause. We would prefer that they use their time to sell products. Damage tends to be sporadic so a systematic change to packaging may be expensive and hard to justify.
 

 *You may assume that damage ranges from 0.0% to 0.1% for purposes of this exercise.

 *Pallets, damaged and otherwise, are the source of some of our damage. We do not own our pallets. We give and get credits as we use and return them. Pallet problems include poor construction, inferior pallet materials, protruding nails, weak or cracked slats or decking that do not distribute the product weight equally, and dirt or grease on pallets that contaminates the food cases (this usually occurs in dirty trucks). In addition, the problem is compounded by a general shortage of quality Grade A pallets which meet Grocery Manufacturers Association standards. Note that the product is frequently transferred to different pallets during the distribution process.

*Special requirements by certain customers, such as smaller displays, increase damage.

*Engineers use a software program to determine the correct packaging material to use for each application. The recommendation that the software provides is generally good, but sometimes it is inadequate for reasons unknown.

*Pallet loads of product are designed to be stacked 2-3 high, but during peak storage time may be stacked 4 high. It is hard to justify spending extra money on every package when this happens only occasionally.

*Damage can occur in special handling situations when distributors mix cases within a pallet load or break open cases and ship individual display cartons.
Some customers may reject an entire pallet if one or more cases are crushed or damaged.

*Crushed cases & cartons may result from excessive weight on bottom pallets, from careless forklift driving, or a poor quality pallet which does not have a perfectly flat surface to distribute the weight equally.

*Product breakage may result from rough handling or crushed cases.

*Extreme temperatures during shipping and storage can also cause product damage such as freeze damage or partial melting of chocolate products or reduced freshness of other products. Poor temperature control in warehouses or trucks or allowing it to remain too long on the store loading dock in the heat or cold could be a cause.

*Excessive humidity can weaken seals, permitting oxygen or moisture leakage/pickup and reducing the quality of some products as well as weakening the corrugated cases.

*Storage next to odorous products can result in rejection due to off-flavors and off-odors in our products.

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