The Hidden Opportunity in Warehouse Productivity: Rethinking Pallet Building and Pallet Matching

By Kyle Franklin, Senior Solution Consultant, Lucas Systems

In many distribution centers, pallet picking and building is treated as a necessary but fairly straightforward task, something that simply happens once picking is complete. Cases are stacked, wrapped, and sent to the dock, right? Because it has existed in largely the same form for decades, palletization is often viewed as “solved.” Yet this assumption masks a significant opportunity. Beneath the surface, pallet building and pallet matching represent one of the most overlooked sources of productivity gains, labor savings, and downstream efficiency in the warehouse.

As warehouses face mounting pressure from labor shortages, rising costs, service-level demands, and constant disruption, leaders are increasingly realizing that meaningful gains don’t always come from massive physical automation. In many cases, they come from rethinking how work is planned, sequenced, and executed, starting well before a pallet is ever built.

Why Pallet Building Has Been Overlooked

Pallet building feels deceptively simple. For decades, the standard approach has been straightforward: pick cases in location sequence, stack heavier items first, lighter items later, and rely on associate experience to “make it work.” Technologies that have been applied historically, such as voice picking or labor standards, have largely focused on doing this same process faster, not fundamentally changing it.

At the same time, innovation attention has been dominated by e-commerce growth. Autonomous mobile robots, goods-to-person systems, and high-speed sortation have absorbed much of the industry’s focus, particularly for each-pick and small-order fulfillment. Case-pick pallet operations, especially in grocery, food, and wholesale distribution, have often been left behind.

The result is a process that depends heavily on tribal knowledge. Experienced associates know how to mentally plan an order, anticipate upcoming items, and make stacking decisions on the fly. New hires take longer to ramp up. Errors, rehandling, restacking, and pallet damage become accepted costs of doing business.

The Real Cost of Traditional Palletization

Traditional pallet building creates inefficiencies that compound throughout the operation. Associates spend time planning instead of picking. Pallets are reworked at the dock because they are unstable or poorly sequenced. Damage occurs when heavy items crush lighter ones. Safety risks increase as associates restack loads or make unnecessary lifts.

Slotting strategies are also constrained. Many warehouses organize inventory from heavy to light to protect pallet integrity, but this limits flexibility. Products may occupy suboptimal locations simply because of weight, preventing the warehouse from fully optimizing travel, velocity, and space utilization.

In extreme cases, inefficiencies could double labor. For example, some operations will pick pallets quickly in basic sequence just to keep equipment moving, then employ separate teams to break down and rebuild pallets for shipping. Other warehouses may do stricter zones based on product type, increasing touch to consolidate as well. These additional touches lead to direct cost increases.

A Shift in Thinking: Pallet Optimization Starts Earlier

Modern pallet optimization reframes the problem entirely. Instead of asking how to build a better pallet at the end, leading solutions ask how assignments should be created in the first place. Pallet quality is determined upstream during order grouping, pallet matching, and pick-path sequencing.

Advanced warehouse execution systems now use AI-driven optimization to decide which pallets should be picked together, in what order, and along which paths. This approach minimizes travel, reduces handling, and ensures pallets are built correctly without relying on individual judgment.

For example, instead of assigning two pallets for the same customer that require traversing multiple departments, systems can intelligently match pallets from different customers that share similar item locations. Two pallets of heavy canned goods picked together can eliminate redundant travel while still producing stable, ship-ready pallets.

This optimization happens dynamically, considering warehouse layout, item attributes, travel costs, and operational constraints. The result is less walking or driving, fewer touches, and smoother execution.

Digitizing Tribal Knowledge

One of the most powerful aspects of modern pallet building technology is its ability to systematize the decision-making of the best associates. Experienced pickers intuitively know when to prioritize a heavy item, when to delay it, and how to adjust based on product mix. Advanced algorithms now replicate these decisions at machine speed.

If an order contains a single heavy item far from the rest of the picks, the system may sequence it first to create a stable base. If the remaining items are dense enough to support weight, the system may instead optimize for travel and pick the heavy item last. This flexibility mirrors real-world expertise while removing guesswork and inconsistency.

By embedding these decisions into execution logic, warehouses reduce ramp-up time for new hires, lower cognitive load for experienced workers, and ensure consistent outcomes across shifts and facilities.

Safety, Ergonomics, and Workforce Impact

Case-pick pallet operations are among the most physically demanding jobs in the warehouse. Every unnecessary lift, restack, or correction increases fatigue and injury risk. Optimized pallet building reduces these burdens by minimizing rehandling and sequencing work more intelligently.

Clear, step-by-step execution, often delivered through voice or ergonomically matched mobile devices, ensures associates receive the right information at the right time. Limiting distractions and excess instructions improves both speed and accuracy, while reducing mental strain.

Importantly, this approach respects the reality of warehouse work. Effective systems are designed not from standard operating procedures alone, but from direct observation of how work is actually performed on the floor, including exceptions and variability.

Measurable Results Across Operations

The impact of pallet optimization is not theoretical. Large grocery distributors using pallet matching have reduced travel by roughly 20%, translating into productivity gains of around 10%. That can be worth millions of dollars annually across distribution networks. Smaller specialty distributors have seen order errors drop by as much as 40%, improving service reliability for time-sensitive customers such as restaurants and retailers.

These gains extend beyond the warehouse. Better-built pallets improve cube utilization, reduce transportation costs, and lower damage rates. Faster, more predictable dock operations lead to quicker door turns, improved on-time delivery, and greater flexibility in labor scheduling.

Downstream benefits also ripple into customer service. Fewer errors and damages mean fewer emergency reships, less strain on sales and support teams, and stronger customer loyalty in highly competitive markets.

Why Pallet Optimization Matters Now

In an environment defined by volatility, flexibility has become as important as throughput. Large, rigid automation investments may deliver speed for a specific order profile, but they can struggle when product mix, demand patterns, or customer requirements change.

Software-driven optimization offers a different path. It enhances human picking rather than replacing it, making operations more adaptable without requiring new buildings or massive infrastructure changes. For existing facilities, especially brownfield sites, this flexibility is critical.

Pallet building may not be the flashiest part of the warehouse, but it touches labor, safety, transportation, service, and cost. Improving it strengthens the entire operation’s resilience.

Where to Start

For many organizations, the first step is simply asking when pallet picking was last examined with fresh eyes. Most warehouses have changed dramatically over the past decade, yet core pallet processes remain untouched.

Leaders should look for wasted travel, rehandling, dock rework, damage, and reliance on tribal knowledge. From there, exploring pallet matching and dynamic pallet building technologies can uncover opportunities that deliver fast, measurable returns.

In a world where efficiency gains are increasingly hard to find, the most valuable improvements may be hiding in plain sight, stacked one case at a time.

Hear Kyle discuss these topics in a recent podcast.

Kyle Franklin is a Senior Solution Consultant with Lucas Systems, leading numerous solution designs and implementations in the U.S., EMEA and Asia Pacific Regions and helping to transform and optimize distribution center operations worldwide. Prior to Lucas, Kyle held roles in international logistics and warehousing for global logistics providers. Kyle has an MBA with a focus in Operations and Strategy from the Katz Graduate School of Business at the University of Pittsburgh and a B.S. in Economics from the University of Illinois at Chicago.