At the NWPCA’s Annual Leadership Conference this year, Sam McAdow, a good friend and leader in the pallet recycling industry, delivered his address as the incoming chairman of the NWPCA board of directors. Sam addressed some of the changes taking place in the logistics industry that are beginning to shape the future of product distribution. He spoke about some of the things that UPS is doing to provide insourcing services. I had never really thought about insourcing until I heard Sam speak.
Toshiba laptop computers represent an insourcing example. If your Toshiba laptop breaks, you can ship it back to Toshiba via UPS to have it repaired under the warranty. What you might not know is that UPS has its own workshop dedicated to computer and printer repairs at its Louisville, Ken. hub. Thus, UPS is combining its shipping efficiency with this special logistics service that it coordinates with Toshiba. As a customer you receive faster, more efficient repair services utilizing an interesting insourcing concept supported by UPS. Most customers probably are not aware this is going on, but it represents the innovative thinking that is possible today.
UPS handles other logistics services to include dispatching drivers and scheduling pickups of supplies for companies, such as Papa John’s Pizza. UPS manages warehouses in Kentucky to order pick and dispatch shipments for Nike shoes and Jockey’s products.
Sam pointed out that total pallet management services are really a form of insourcing, where total pallet management and handling can be done by our industry either onsite or offsite.
Sam stated, “Now customers are demanding more than pallet management; they want total reverse logistics management. Wal-Mart is opening nationwide reverse logistic centers in which a pallet provider has to manage all the recyclable returns from stores, which include white wood pallets, CHEP pallets, plastic pallets, RPCs, baled corrugated, stretch film and consumer bags.”
While pallets may not be heavily involved in some of the above-mentioned services, these services are indicative of the innovative thinking that is beginning to invade the logistics function. After all, pallets made their entry into shipping and logistics by both reducing backbreaking tasks and speeding up delivery. So, innovations that make the logistic system more efficient are consistent with the gains that wooden pallets have made in the past. Smart companies can take advantage of these opportunities to increase business by offering related services to existing customers.
A posting this March on our Pallet Board (www.palletboard.com) included material from an article that was published on the Financial Times Web site. It covered outsourcing product sortation to China, where many products are now manufactured. Because of the low cost of Chinese labor relative to most North American and European countries, products have typically been hand packed into containers and shipped across the ocean. Eventually these products are unpacked and often palletized for final distribution to the store. According to the article, a trend is starting to emerge where all but the most unavoidable handling is transferred to the products’ origin in Asian countries. This could reduce much of the higher handling cost generated in richer destination countries.
The concept is really quite simple. Before shipping products from Asia, they are sorted into the right product mixes that are required by individual stores or distribution centers. It is even possible to pack products into corrugated display stands. The potential variety of packing options at the source is probably almost unlimited. Major companies are just beginning to develop these new strategies at this time.
If more Asian goods come to the U.S. already palletized, that could have a profound impact on the U.S. pallet market, especially new pallet production. A number of factors have limited how much of the logistics function companies have allowed to take place in Asia. This could change as China transitions to policies and situations more favorable to multinational corporations.
Chaille wrote a detailed analysis of China’s logistics industry on page 43. It covers many things that I found quite interesting.
Logistics are changing, whether they are local, regional, national, or global. Since pallets are the common base used in shipping, pallet companies are likely to be heavily involved in some aspects of these changes.
As the leader in business analysis and market information for the pallet industry, Industrial Reporting Inc. and the Pallet Enterprise are dedicated to keeping our readers aware of the latest changes in an ever-changing world.
You can share in the discussion by visiting and commenting on the Pallet Board. Our staff regularly monitors the Pallet Board, the major online forum for the pallet industry. It is an excellent way to post suggestions for pallet companies and to catch our attention. It can be a good networking tool as well as a place to find answers. Together we can work to build stronger companies, better pallet services, and a healthier industry.
