In this article, learn about:
The basics of TI/HI
The importance of TI/HI compliance in preventing damages and chargebacks
Best practices for pallet building
Landing shelf space at a major retailer is a milestone for any brand, but that dream can quickly turn into a logistical nightmare if you overlook the back of house details. While pallet building might seem like a simple warehouse task, it is actually one of the most consequential compliance touchpoints a supplier has with retail partners. In the world of high-stakes retail, a pallet is far more than just a platform for products.
Suppliers who treat palletization as an afterthought often find themselves paying for it downstream in the form of deductions, rework fees, rejected loads, and damaged inventory. This guide moves beyond the basic definitions to explore the mechanics of stable stacking and why getting the digital-to-physical connection right is the key to protecting your margins.
Redefining TI/HI as a Compliance Metric
TI/HI is the fundamental framework for arranging products on pallets.
TI (Tier): The number of cases that fit on a single layer of the pallet.
HI (High): The number of layers stacked vertically before reaching safe weight or height limits.
TI x HI equals the total cases per pallet. This calculation sits at the intersection of three "ceilings”: footprint, height, and weight. The binding constraint, or the limit you hit first, changes by SKU. For instance, a pallet of cereal boxes is typically bound by height, while canned goods are bound by weight long before they reach the maximum height limit.
Retailers care about these numbers because their automated storage and retrieval systems are calibrated to specific dimensions. If your pallet arrives with a different TI/HI than what was declared, it disrupts the entire inbound flow, leading to manual rework and lumper fees.
A lumper fee is the cost of using lumper services. A lumper is defined as a person who is responsible for loading and/or unloading trucks at a distribution center or warehouse.
The Mechanics of a Secure, Retail-Ready Stack
Building a sturdy pallet requires more than just stacking boxes. To meet retailer standards and prevent damage, warehouse teams should follow these foundation principles:
1. Weight Distribution and Foundation Stability
Always position your heaviest boxes on the bottom tier to create a low center of gravity that resists tipping during transport. This protects lighter, more fragile items on top from being crushed.
2. Interlocking Layer Patterns
To ensure structural integrity, avoid "column stacking," where boxes sit directly on top of each other like a tower. This pattern becomes wobbly as it grows. Instead, use a brick-laying or interlocking pattern, rotating each layer 90 degrees from the one below it. This prevents entire columns from shifting independently.
3. Edge Alignment and the Overhang Trap Boxes
Items should extend as close to the pallet edge as possible without crossing it. Overhang is a major safety hazard and a frequent trigger for retailer chargebacks. Conversely, if boxes sit too far inside the perimeter, strapping and stretch wrap cannot grip the load properly, leading to instability and ultimately damaged merchandise.
4. Securing the Load with Precision
Before applying stretch wrap, the load should be secured with heavy-duty strapping. The material matters:
Steel strapping: Best for extremely heavy, non-compressible loads like beverages or building supplies.
Polypropylene: An economical choice for general freight up to 1,500 pounds.
Polyester: Offers high tensile strength and is ideal for loads that might settle or compress during long-distance hauls.
Retailers generally expect at least two straps per side for basic stability, though tall or heavy loads may require cross-hatch patterns for safety.
The ASN-to-Pallet Connection: Where Compliance Lives
The most underexplained part of palletization is the link between physical stacking and EDI. Retailers like Walmart and Target specify TI/HI requirements in their purchase orders (EDI 850).
When you ship, your advanced ship notice (EDI 856 or ASN) must accurately reflect the physical TI/HI on the truck. If the ASN declares a 10x5 configuration but the receiver finds an 8x6 configuration, the mismatch triggers a defect. This is where pallet quality becomes an EDI accuracy problem. Discrepancies between your EDI data and physical pallets often trigger receiving delays or compliance chargebacks because the distribution center (DC) must manually rebuild the pallet to fit their systems.
Why Retailers Care (and What it Costs You)
Retailers prioritize predictable, repeatable pallet quality because unstable or incorrectly labeled loads disrupt the flow of their high-speed DCs. Walmart enforces these standards through its Supplier Quality Excellence Program (SQEP), specifically Phase 3, which focuses on pallet and load quality.
If your pallet doesn't measure up, the financial penalties are steep:
Administrative fee: $200 per defect category per purchase order.
Pallet defects: An additional $4 per non-compliant pallet for issues like overhang, poor quality, or incorrect height.
Load quality defects: $20 per affected load for shifted or unstable freight.
ASN errors: A $25 charge for missing or incorrect data on the ASN.
Beyond SQEP, poor pallet building can tank your OTIF (On-Time In-Full) score. If a pallet collapses in transit and is rejected at the dock, it counts as both a late and an incomplete delivery, potentially triggering a penalty of 3% of the cost of goods sold (COGS) on all non-compliant cases.
Retailer Comparison Reference
Requirement | Walmart | Target | Amazon (FBA) |
Max pallet height | 60” (including pallet) | 60” (including pallet) | 72” (non-stackable) / 48” (stackable) |
Pallet type | 48” x 40” GMA grade A | 48" x 40" GMA | 48" x 40" GMA |
Labeling | GS1-128 on two sides | GS1-128 on License Plate | Declared in Seller Central |
Stretch wrap | Clear only | Clear only | Mandatory for stability |
For more detailed information regarding Walmart’s SQEP requirements, specifically phases 1-3, check out SupplierWiki’s SQEP Handbook.
Operationalizing Pallet Quality
To move from basic knowledge on the dock to a documented, audited discipline, consider these steps:
Document specs by SKU: Create standard templates for every product and retailer combination to eliminate guesswork.
Train and audit: Ensure warehouse staff understand the financial stakes of a "leaning" pallet and run internal audits to catch errors before they leave your facility.
Use technology: Automated pallet wrappers apply consistent tension that manual wrapping often misses.
Manage conflicts: If a retailer’s TI/HI requirement compromises product safety (e.g., crushing fragile items), reach out to your compliance contact to formally request a spec adjustment.
Pallet building is the final gatekeeper of your profitability. By mastering TI/HI, enforcing stacking best practices, and ensuring your digital data matches your physical loads, you can transform a potential source of chargebacks into a competitive advantage.
For suppliers looking to go deeper on retailer compliance, ASN accuracy, and navigating the complexities of programs like Walmart SQEP, SupplierWiki offers a library of free resources, including audit checklists and deep-dive webinars. Explore our full collection of guides to help you protect your margins and grow your retail business with confidence.
