Dealing with major problems for big brands and retailers has become a specialty for Steve Clark, the founder of Propak Corp. and the new president of PLA, a national pallet management and supply chain services provider.
As Clark takes over the helm for PLA, he took some time to share his insights and thoughts on the pallet market and its relationship with major retailers. He commented on what made Propak successful and how he sees pallet trends changing in the future.
Pallet Enterprise: What are the top three changes you’re undertaking as you take the reins of PLA?
Steve Clark: It’s about six weeks now that I have held this spot. So, the honeymoon period won’t last much longer. But your question suggests that there are things we need to stop doing so that we can do something else.
The fact is, PLA has first-in-class operational talent and first-in-class sales talent. Our systems, like everyone else’s, certainly can be improved, and we’re in the middle of that process. So, I would like to change that question to, “What am I emphasizing?” I am putting accelerated focus on our technology. We have a robust technology department that services our clients in a variety of ways, and I think it’s a sales and commercial opportunity for us.
Looking at how competitive the market is today, with the addition of the acquisitions of Propak and the PLA network, we are now able to offer a wide variety of ancillary services beyond just pallets. Lastly, I am focused on ensuring how we can make and keep PLA a place where everyone in the industry wants to work. Not just current employees, but we want to be the destination workplace for those people who are interested in supply chain management.
Pallet Enterprise: Those are some great focuses for your management attention. What are some more specifics for each of those three areas?
Steve Clark: From the technology standpoint, on the services side of our business, we have a unique perspective on the needs of our customers in terms of them being able to see what’s actually occurring internally. We cooperate and work very closely with most of the tech teams of our major customers to drive efficiencies and value into the relationship beyond typical pallet transactions. I can’t share much more because a lot of that is proprietary information.
From the value-add services standpoint, that’s a no-brainer. We have a robust transport brokerage division, and we know that every customer that we ship pallets into also utilizes transport on significant material levels. We’re able to participate in their quote process and to identify transportation savings and process efficiencies. We can see the number of touches and players and have the opportunity to solve problems that maybe we or they didn’t even know existed. We work really hard to knit ourselves as close as we can to our customers and not only speak their “language,” but to speak it with their “accent.”
Pallet Enterprise: You talked about the importance of technology. What solutions have you deployed?
Steve Clark: We’ve worked closely with Helioz Technologies the past three years on Pallet Insights, their ERP application that seamlessly integrates all the different systems we use to manage our business, and it’s really helped us drive efficiencies across our recycling operations, which is a top priority for us as a company.
Pallet Enterprise: Do you think that the integration between pallet and pallet service providers and retailers in particular is just going to become greater and greater? Or do you think retailers are going to do more of this themselves?
Steve Clark: I don’t think it will become greater and at an accelerated rate. But the road that got us here isn’t necessarily the road that’s going to get us where we’re going. This requires open-mindedness, customer-centric ideologies that allow us to see how PLA will fit into customer ecosystems.
Pallet Enterprise: The retail sector just finished an intensive period of destocking. How has that made the recycling business tougher, in your opinion? And when do you think that the recycling sector will see some sort of demand pickup overall?
Steve Clark: We are not immune from anything that affects the industry at large. From the service side, we’ve seen the contraction of core values. We’ve seen contraction of the sales prices, and we’ve seen inventories grow at historic levels. So, these are challenging times. That’s why I think having a more comprehensive view of the relationship between the industry and the consumer is important. When an uptick occurs, I don’t know. I will say this: it won’t happen soon enough.
I don’t anticipate a material change candidly for the balance of this year, for sure. Which then as you well know in our industry, makes us look at the first early second quarter of next year. So, this is a time where everybody gets better or gets gone.
Pallet Enterprise: What happened over the last several years was unprecedented in terms of pallet shortages and price spikes. The pandemic created an artificial market, and now everyone is flush with cores. I think it could be several years before we see a more robust market.
Steve Clark: We have to consider that the “normal” that people want to benchmark against no longer exists given the investment that major retailers are making in automation. How retailers are carrying inventory is forever changing our industry. And that affects the question that you asked me. So, it’s no longer, “When will it get better?” You can’t ask that question because it implies a certain stability on the consumer side. And that isn’t necessarily the case because the rapid pace of change that is occurring is unprecedented. I think that’s where having a more holistic perspective is going to play the role in separating those who succeed and those who don’t.
Pallet Enterprise: A number of retailers or product manufacturers have put in vision inspection systems to monitor pallet quality. How is this conversation about quality and standards changing? What are the drivers? Has the time come for some more concrete definitions, especially for recycled pallets? Would you agree with that or not?
Steve Clark: Yes, it’s a great question. Across the economy, trillions of dollars are being spent on smart automation. And smart automation is very unforgiving to variances in the platform. When you ask, is it time for new specification? The new specification is being made for us as a result of the automation that’s being installed in the environments where the platforms have traditionally resided. Whether we lead it or are drug to it, it is going to change. It is changing, and it’s unavoidable. Automation in supply chains is going to change the nature of our industry forever.
Pallet Enterprise: The real problem on the recycling side is that there are no real standards when it comes to #1s/As or #2/Bs or other specs. PLA will have different standards from 48forty Solutions or Kamps or other pallet suppliers.
Steve Clark: Well, the standard is not what PLA or 48forty says. It’s what the major retailers want. We respond to customer demand and their specifications. The market always finds its price in a commodity-based environment. And right now, the market isn’t prepared to pay for that particular pallet, but it will.
Pallet Enterprise: Maybe there is a place for specific pallet guidelines that is monitored for quality control. Not every pallet has to fit these criteria; maybe only 15%. An independent organization could conduct audits similar to ISPM-15 for pallets. This pallet could be marked, monitored and sold at a premium price due to the higher cost and quality.
Steve Clark: Isn’t that kind of the way it’s always been? I mean, if you go back to the Sam’s Club sugar pallet that was required 20 years ago, it was different from a traditional high-grade GMA. That’s my point. The market always finds its price. Is there a standard? Yes, the standard is the engineering definition of what’s acceptable inside of the smart automation equipment. We are going to have to repair at an increasingly higher specification and be able to sort in a way that creates a consistency of outcome. To your point, automation smart pallet inspection systems are becoming an integral part of the industry, and that’s only going to increase in some regards. I think you’re going to have customers begin demanding that their pallets are put through that type of apparatus to assure a consistency of quality.
Pallet Enterprise: Another trend that I’ve been hearing from retailers is a move toward reducing SKUs in stores. This may not be as big of a deal in warehouses. Do you see that happening, and do you think that such a trend would have an effect on pallet usage or not?
Steve Clark: Yes, that’s a great question. It would be an exaggeration to say I’ve seen it. I think that there certainly have been in the worlds that we touch incremental SKU reductions, but all that ultimately means is the consumer consumes more of a limited number of items. I don’t think this means a reduction in the number of pallets because shelves have to be full. They will just be full of fewer different items.
Pallet Enterprise: You built Propak from scratch with an idea and grit. Tell us about what has made you a success. Once in an interview with the Arkansas Democrat Gazette, you said that there is no real secret. But didn’t good timing and doing new things for complex supply chains play a big role?
Steve Clark: Well, I think the key to my story was not being smart enough to know when to quit. When Propak started, Wal-Mart was utilizing a lot of local companies to do their back dock operations. I had witnessed that and done that work. CHEP had that contract at the time, so I cut them a deal. I consolidate those backend docks into a better funded, better insured, more standardized service offering. When CHEP transitioned out of that work, we stayed in. Both Wal-Mart and CHEP were willing to take a risk on me.
This industry places a high value on known quantities. If you are known as a quality producer, there’s always room in this industry for people like that. And I was just one of the fortunate ones that showed up at the right place with the right attitude and was rewarded for it. But I think there’s a lot of stories like that in our industry.
Pallet Enterprise: In the past, you started a program focused on training up future entrepreneurs. What are you looking for in the next generation of leaders in the pallet industry? What are some key lessons that you teach young people who you mentor in business?
Steve Clark: Yeah, I founded a program called Noble Impact, and then we started the first charter school in Portsmouth, Arkansas, called Future School. This school is based around the idea that instead of working to get a job; we should have the mentality to make a job. Entrepreneurialism isn’t something someone does, it’s the lens through which they see the world. And if that is the case, then we’re all on some level entrepreneurs.
At Future School, we introduce our high school students to the industry where he or she wants to work. They’re in the marketplace and learn what different industries are all about.
Pallet Enterprise: So, to follow up on that question, what are you looking for from the next generation of leaders in the pallet industry? What are some key lessons that you’re teaching those young people?
Steve Clark: So critical thinking — the ability to adapt at a very, very quick pace, that is key. Unless you’re going to be a physician or an engineer or accountant, then work diligently on your critical thinking skills. Also, work on your communication ability. Unless you go to certain trade jobs, whatever you think you’re going to be doing in ten years, it’ll be something else. So, the best thing you can do is just prepare yourself to think.
Pallet Enterprise: Revisiting the three things that you said were your focus – technology, value-added services and attracting talent – are there some key performance indicators that you will be monitoring to see if you are a success?
Steve Clark: Healthy things grow, and healthy things are sustainable. The key performance indicators we will focus on are meeting our growth objectives, providing shareholder return worth the risk and improving efficiency. Can we do more with less? I believe in the power of leadership, systems and culture – those will drive the future return for this company.
PLA Software Success Story – Pallet Insights™: Brad Cutcher, COO of PLA, talks about how Pallet Insights™ has helped the company bring together various operations under one ERP software. It has eliminated duplication entry and lost paperwork and improved communication and tracking within the company. Find out how this software can help you whether or not you are a big or small pallet company. Schedule your DEMO at www.pallet-insights.com
