LPR, the French-based pallet rental company, now delivers over 38 million pallets annually to customers in 10 European countries. It recently opened a new pallet depot in the Paris region; the Paris depot will be the template for
three other new pallet depots it is planning in France. The company, with annual sales in excess of 100 million Euros, is gradually increasing its European coverage with operations now established in Germany.
The move into Germany was to provide an additional level of service for existing customers rather than a foray into a new market to gain new accounts.
“For us, going into Germany was a logical move to increase our coverage with existing customers,” said Torsten Wolf, CEO of LPR. “We are definitely building international accounts such as Kraft and Kellogg’s.”
“Multinational accounts require local execution,” Torsten added. “One function is pan-European, the sourcing and distribution of pallets. Customers want to have one provider.”
LPR is large enough to offer efficient scale across its market area while providing strong local service, according to Torsten. “We pride ourselves in being big enough to be professional but small enough to be responsive,” he said.
Torsten, 45, a German native, was a management consultant before taking the helm of LPR in 2003. He led a management buyout of the company in 2006. The buyout was supported by Atria Capital, a French private equity fund.
With its presence in Germany, the company now has six regional offices serving 10 countries. “What is opening doors is our reputation of having the understanding and methods,” Torsten said. “We have established that credibility.”
LPR has expanded into a new country every two years since its beginning. “Going into a new country is a significant investment for us,” noted Torsten. “It takes time to prepare the market. In Europe, every country is different; every country has different retailers. You can’t just send in one guy and get established. We have to send a whole team so people will know that we are for real.”
As far as the opportunity for pallet rental in Germany, Torsten emphasized a point that might not be obvious to many North Americans. The European business community is hardly homogeneous when it comes to pallet programs. Although pallet rental is the dominant model in France and the United Kingdom, the EPAL pallet exchange system still dominates in Germany. In some other countries, such as Italy, both rental and exchange have been problematic.
There are important cultural and business differences between European countries. In Germany, for example, pallet exchange has been much more respected, resulting in the continued success of EPAL in that country. In other countries, such as France and elsewhere in Western Europe, exchange practices have been less accepted, making the case for rental much stronger.
“Pallet renters do not want to run exchange programs, and retailers do not wish to have obligations,” said Torsten.
The different approaches to pallet programs in national markets in addition to language differences across Europe has required a strategy that combines strong local service while leveraging pan-European resources to best serve customers. LPR has six regional general managers heading lean local organizations while it has a corporate information technology system.
“We have an extremely good platform,” said Torsten. “It is also very easy to interface with customers. Electronic invoicing is one example. This is very professional, very stable. Our big advantage is focus. Our IT investments are focused on exactly what we are doing.” Invoicing and service must be provided in the appropriate language.
Headquartered in Toulouse, France, LPR has regional offices in France, the United Kingdom, Benelux, Spain, Portugal and Germany. It operates a pool of 10 million pallets, employing about 200 people and working with 57 depots. Pallet recycling is done by contract relationships, not by LPR employees.
New pallets for the LPR pool are purchased from a limited number of pallet manufacturers across Europe as needed. “We have a network of 20 or 30 volume agreements,” said Torsten.
LPR holds about 40% of the pallet rental market in Portugal and 20% in France, according to a report by Capital Partners in 2007. It has a particularly strong presence in the beverage industry.
New Depot Increases Automation, Capacity
The new depot at Savigny-Le-Temple near Paris is one of LPR’s largest in Europe with a capacity of more than 3.5 million pallets a year. “The opening of this new depot doubles our production capacity for the Paris region,” said Pascal Mondet, director of logistics and operations for LPR in France.
LPR management sets a high priority on choosing the best location for a depot and then designing and equipping a depot based on specific requirements. The Savigny-Le-Temple depot location was chosen to provide close proximity to key customers and to Paris as well as easy access to highways to facilitate shipment of pallets to other parts of the country.
“At Savigny-Le-Temple, we are at the crossroads of a large number of logistics channels,” said Pascal. “Many logistics companies, the distribution hubs of the FMCG (fast moving consumer goods) chains and the principal transporters, all of whom are major users of our pallet pool, have chosen to set up in the Seine-et-Marne department. With this new platform we will be able both to rationalise transport resources used to collect our pallets from their sites and to have direct access to Paris and its suburbs as well as to motorway networks that provide easy communications with Northern, Eastern and Southern France and the rest of Europe. We are thus able to extend LPR pallet pooling services easily to all our clients outside Ile-de-France.”
The new depot is over 160,000 square feet and handles half-pallets as well as standard 800×1200 and 1000×1200 pallets. An automated pallet recycling line was custom built to provide quality control, repairs, painting and waste disposal.
Incoming pallets are separated by model (large and half-pallets) for sorting. Depending on orders and inventory, pallets are sorted manually (mostly the lighter half-pallets) or automatically (mostly the 800×1200 and 1000×1200 pallets). During sorting, broken and non-standard pallets are removed, and pallets in good condition are stacked for re-issue.
Automation figures heavily in handling and moving pallets and includes the use of conveyors and Dalmec manipulators. Machines also are used for stacking, destacking and painting. Pallet repairs are still largely a process of manual labor, but ergonomic improvements, such as the use of turntables, help eliminate unnecessary handling.
Overall, depots are a key part of the LPR business strategy. “We have undertaken a major modernization process,” said Torsten. “This process is a part of our corporate strategy both for economic goals and social concerns.”
RFID Trials, Electronic Invoices
LPR was a key player in pallet level trials of RFID (radio frequency identification) technology last year involving other supply chain and technology partners. It was coordinated by GS1 Europe, a collaboration of European national standards organizations.
“We have been keeping updated on RFID for the last six or seven years,” said Torsten. “In the last 12 to 24 months we have moved into trials in some applications and are gaining some experience. RFID has been very successful.”
Like the experience of CHEP in North America, however, LPR has not experienced significant demand for RFID-tagged rental pallets. Jane Gorick, general manager for LPR in the United Kingdom, told a British publication earlier this year that while LPR has the capability to offer RFID-tagged pallets, customers seem more interested in RFID tags on cardboard cases or cartons.
LPR recently added a Business Intelligence application developed by Business Objects. With this system, LPR can track pallet flows, reducing dwell time and transport costs while promptly alerting customers, service providers and retailers of any anomaly that it identifies. LPR customers have permanent access to an Internet interface that enables them to monitor pallet movements, stock and current orders.
Another initiative undertaken by LPR is electronic invoicing, which it announced in December 2007. With the broad acceptance of electronic invoicing within the FMCG sector, adding this capability reduces administrative costs for customers as well as LPR. The initiative has been successful for the most part, but Torsten noted that each country requires a slightly different approach. In addition, while electronic invoicing is widely used to purchase goods, it is not as widely used for buying services, which is how some customers classify pallet rental. For this reason some companies do not wish to participate in electronic invoicing.
“We have recently been redefining our core values,” Torsten added in conclusion. “These are customer service, quality and integrity. That’s pretty much it — big enough to be professional and small enough to be very reactive to customer needs.”
For more information on LPR, visit the LPR Web site at www.lpr.eu.
