Pallet movements used to create a new economic indicator

A new economic indicator, the AFGC CHEP Retail Index, provides unique insight into the performance of the Australian retail market.

The AFGC CHEP Retail Index draws on physical and product movements throughout Australian supply chains to provide a new and early indication of economic activity. The indicator also provides insight into historical trends and a forecast for the next quarter’s activity.

The economic indicator has been developed by extensive analytical modelling using years of CHEP transactional data and other data sources, combining historical Australian Bureau of Statistics (ABS) data with more than 10 million data points based on CHEP pallet movements.

This methodology has been tested by Deloitte over the past two years and the results then subjected to a retrospective review over the last seven years, indicating that the model is a reliable lead indictor of the ABS Retail Trade.

By combining a range of measures of pallet movements - pallets on hire, pallets received and pallets sent - for various industries and applying advanced analytics, relationships can be extracted that model retail sales. CHEP keeps track of pallets and pallet movements between customers and service centres. At the beginning of the quarterly forecast period, CHEP provides this large data set to Deloitte Analytics. This data set includes 10 million data points based on CHEP pallet movements derived from 20,000 CHEP customer accounts. Each pallet movement is linked to an account. The data also includes unique movement identifiers. The data map includes flows from suppliers, packagers, and logistics and retailing entities.

CHEP Australia General Manager Phillip Austin said the AFGC CHEP Index reports on information from the physical supply chain, a source to which the market has never previously had access.

“This is a sophisticated piece of work that has its roots in actual pallet and product movements, and is another example of how CHEP’s unique position in the Australian supply chain can benefit our customers. Fundamentally, we are offering a new perspective, with data derived from a rich and diverse source,” Austin said.

“The launch of this index is an innovative way in which CHEP seeks to fulfil its commitment to customers of delivering value, to reflect that CHEP is more than a pallet company, and we will continue to seek ways to unlock value for individual customers and industry through collaboration.”

Australian Food and Grocery Council (AFGC) Chief Executive Kate Carnell said the AFGC CHEP Retail Index was an exciting tool for providing information to industry and economic commentators as well as the broader business community, especially the food and grocery manufacturing sector.

“The value-adding AFGC CHEP Retail Index provides industry with another useful tool to gain a better market insight and assess retail confidence, and is a reliable forward look at the future trend of underlying supply chain activity and retail trade,” Carnell said.

Using analysis by Deloitte Analytics and commentary from AFGC, which represents Australia’s $102 billion food and grocery manufacturing sector, the AFGC CHEP Retail Index will be available each quarter, up to two weeks prior to the release of the official corresponding figures by the ABS.

The AFGC CHEP Retail Index will be published quarterly, with the next announcement due in late July 2011. Read the Index and access more background information at www.afgc.org.au and www.chep.com.