Want to learn how to successfully launch a national network for the pallet industry? Just ask the industry leaders behind PALNET. They have done it and obtained some key accounts along the way.
The national network of pallet companies known as PALNET has been around since 2004 and has made some major progress over the last few years by winning national accounts, notably a major home improvement retailer. While some other national organizations struggle to get traction, PALNET has quietly establish its reputation and continues to benefit the independent pallet companies that are part of its network, including its key ownership partners.
The company has marketed itself with the slogan, “The pallet business redefined.” And the Pallet Enterprise sat down with Wayne Collier, the executive vice president of PALNET, to discuss the organization’s success and key lessons he has learned directing the operation.
Pallet Enterprise: PALNET has gotten some traction in the marketplace over the last few years. Tell us about what your organization is doing to be more competitive in the marketplace.
Collier: We have been extremely pleased with how well the market has received PALNET. We are headed into our eleventh year of business and currently service over 1,000 customer locations.
PALNET strives to win accounts with sustainable pricing; deals that work for both our members and our customers. Being competitive in our business means not only continuing to invest in things like automation, and more sophisticated software for tracking and reporting, but by bringing a larger value proposition to both the supply side and the sell side. It’s a difficult balance that is best maintained by value-added services that aren’t directly tied to the price of the product.
Pallet Enterprise: What value has PALNET brought to the market? What value does the organization offer pallet network partners?
Collier: First and foremost, we have raised the bar on accountability in our relationships. Our industry historically has a poor record with that.
PALNET was created by best-in-class pallet entrepreneurs. As our business grew, we hand-picked like-minded partners to build America’s largest pallet network. We bring consolidation, one point of contact, and visibility to all pallet activities for our customers. Our goal has always been to be as professional as our customers.
PALNET offers a great value to our service providers. Not only are we the link for them to secure national accounts that otherwise would be unobtainable, we share best practices and market trending information that is useful in managing national accounts. The same principles can be applied to their local accounts.
Pallet Enterprise: Has PALNET extended beyond just pallets? Is PALNET looking at doing more transport packaging or reverse logistics services beyond what a traditional recycler will do? Why or why not?
Collier: I believe the current whitewood market has forced every pallet company out of their comfort zone and into other service offerings. PALNET’s efficient business model has evolved to include consolidated collection services, beyond pallets, that assist in our customers’ sustainability goals.
PALNET has also found opportunities within our customer base to offer transportation options for their vendors. We continually strive to be more integrated with our customers’ needs no matter what they are.
PALNET does recycle stretch film and other forms of transport packaging. We also recently got in the wood pellet market. Some locations turn waste wood into home heating fuel.
Pallet Enterprise: What is an example of best practices that you have carried across your network?
Collier: Help ensure accurate pallet reporting using a three stage process that includes a series of audits. A supervisor looks behind the person giving the counts usually a forklift operator. Then our national operations guys look behind the supervisors to make sure that everything is being reported in correctly. Reports allow us to identify any problem areas. And we now use third party services to audit on a spot basis when a need arises.
Counts can be flawed because the first person is overwhelmed with the next load coming in or becomes complacent. Pallets get lost because of poor accounting. This accountability makes sure that everybody knows that accuracy is important all the time and on every load.
Pallet Enterprise: Do you feel like in the future that it is going to be important that pallet recyclers do a lot more than just recycle pallets? If so, why?
Collier: It is absolutely necessary, because PALNET wants to be ingrained with our customer. We don’t want to be exposed to the point that our competition can undercut us on price. We believe by getting more ingrained with our customer that the value is there. The more that we can process in one trailer, the better our customers like it.
PALNET offers what we call our Consolidated Collection Service where customers can put more than one type of asset on a trailer. A lot of people are starting to do that. But we offer a large network for those opportunities. We can process office paper, old cardboard containers, stretch film and other recyclables. If we consolidate for a number of companies, then our accumulation rate is much faster, which allows for quicker, more efficient processing of the recyclables.
Pallet Enterprise: Your organization offers tracking software and asset management tools for clients. What key metrics appear to be most important to your end user customers?
Collier: Our tracking software can not only show macro trending information, but we can provide details of each trailer load by the individual asset that is either delivered or picked by PALNET.
On the core side of our business the key performance indicators (KPIs) most requested for their dashboard are pickup timeliness, pallet counts and audit results.
On the sell side, on-time delivery in full loads, average days late, rate of rejection/returns and order accuracy seem to be most important. Our system offers portals that allow our customers, partners and vendors to collaborate with us allowing us to get closer to them. This allows us to move quickly on identifying opportunities and executing on them.
Pallet Enterprise: Why is it important for independent pallet companies to group up with some network like PALNET? Is PALNET still seeking to expand its network? Or is the organization pretty much set at this time?
Collier: If an independent recycler is not working with a national network they will find themselves on the outside looking in at the greater opportunities in the marketplace. Being a part of PALNET means that an independent can up-sell to any of their accounts that have a national or large regional potential and secure that account contractually. We currently have over 120 service locations but are always interested in meeting with new potential service providers.
Pallet Enterprise: How does somebody get involved with PALNET? What needs do you have right now?
Collier: We don’t have a specific geographic need in an area right now. But we are always looking for good operators who can be part of our network. Anyone who is interested can email or call me to discuss possible opportunities.
PALNET is probably looking more for companies now that do more than just recycle pallets, particularly companies that can recycle other forms of packaging, such as old cardboard containers, stretch film, that sort of thing.”
Pallet Enterprise: Does PALNET offer specialized branded pallets? Or private rental pools?
Collier: PALNET does manage closed loop pallet programs where the pallets are owned by the customer, some that have our specific labeling and toll free number to help us recover strays. We decided early on not to get in formal pallet pooling.
Pallet Enterprise: How does PALNET work and how does its system/approach differ from the traditional white-wood recycled market?
Collier: By using our network of providers to fill a need in the market to service national accounts, we believe that PALNET has taken the pallet business from its loosely defined and unorganized beginnings and applied a new standard of excellence. By instituting total accountability, complete transparency, responsibility, and reliability we have redefined the pallet business.
Pallet Enterprise: What are the three biggest headaches that customers report are problems with their previous pallet vendors and why do companies switch to a national organization like PALNET?
Collier: Inconsistent pallet quality, slow/missed deliveries or pick-ups and response times in resolving issues.
Key to our success has been our unique business model in that our accounts are managed by local owners, not managers. Our customers appreciate the close attention they receive on the local level while corporately receive all of the consolidation i.e. billing/invoicing that makes their pallet program easier to understand and manage.
Pallet Enterprise: How do you see the core supply crunch impacting the future of the recycled pallet market and your business?
Collier: The industry in general and leaders at PALNET are all concerned about the continuing downward spiral of not only the amount of pallets in our industries’ pool but also with the quality. With demand as intense as it is just now, core acquisition price continues to climb. Those costs have to be passed thru and customers are likely to reach a tipping point on purchase prices that drive them to seek other options on shipping platforms. As long as the economy stays strong, we don’t see any relief in sight as our pool is not being replenished at a rate to offset demand.
