Problem: Midwest pallet and lumber company needs quotation software to be flexible for fast changes in the lumber market.
Solution: AMS develops a solution to produce quotes quickly based on lumber price movements.
Automated Machine Systems (AMS) has introduced a new web-based platform for producing quotes or proposals for customers or prospective customers. The new tool, dubbed PalQuote, automatically updates quotes for changes in lumber prices and other factors.
PalQuote initially was developed for Pallet Service Corp., an existing customer.
Pallet Service had been using the AMS PalMate Enterprise Resource Planning software for about 4-5 years. When lumber markets began experiencing a great deal of volatility a few years ago, it required regular monitoring and updating quotes that had gone out to customers and prospective customers. It was a labor-intensive process involving numerous spreadsheet files. Pallet Service wanted a solution to keep lumber prices current along with its quote proposals.
“We developed a product that is relevant to the industry as a whole, but it solved their problems,” said Kevan Grinwis, vice president of AMS.
Pallet Service has two plants in Minnesota and one in western Wisconsin. About 70% of the company’s business is cut stock manufacturing, 28% new pallet production, and 2% recycled pallets. The company has annual sales of about 1 million pallets and 77 million board feet of lumber. The volume of lumber is equivalent to about 4,800 truck-loads.
“As we are growing our company to scale our processes, one thing that is very laborious is when lumber prices change,” said Nick Wenner, vice president of operations for Pallet Service. “As one of the main variables in the pallet price, you have to go in and re-do pricing on all affected pallet quotes.”
Beginning in 2017, lumber prices were changing frequently, he noted. “We had to constantly re-do the prices for customers.”
“Every time you get a changed lumber price outside the (margin) threshold, we have to re-do it.” It takes about 10 minutes to update and change a quote for a company. Staff also have to look for other quotes that are impacted by the change in lumber prices — a “big, long drawn-out process,” said Wenner, because the information was compiled on multiple spreadsheet files.
The company’s management team began wondering and asking: what if it could utilize a database, input a new lumber price, and the price change would automatically be retrieved and update outstanding quotes accordingly — and give the company a list of what quotes were affected and should be reviewed?
Pallet Service considered another software developer in addition to AMS but ultimately chose AMS for the project. “We knew we wanted it to talk to our ERP system,” explained Wenner, “and if that was going to be one of the end games, who better to do it than our existing ERP provider.” AMS also was competitive on price compared to other options and was a trusted, “known commodity,” he added.
Pallet Service has been using PalQuote for about three months at the time Wenner was interviewed for this article. It has used the new program for producing quotes, but it is still in the process of building the database for the program and ensuring the data is correct. “We’re taking a step-by-step approach to make sure we’re setting up the database properly,” commented Wenner.
“We’re just taking out time,” he added. “We don’t want to have to re-do it again.”
PalQuote does more than adjust quotes for changes in lumber prices. It accounts for changes in labor costs and other factors. “If I need to cover $1 in manufacturing overhead with every pallet, and wages increase and now the overhead is $1.20, it changes the variable and will show what pallets went outside the threshold margin we set,” said Wenner.
“One other thing we like about it,” commented Wenner, is that PalQuote helps the company track the use and cost of consumable materials, like nails and banding. “You can run a report, based off the pallets we quoted and sold, that will tell us how many bands and nails we should have used, and how much we actually did use. So, it helps us track how we priced the order and the cost of the materials we actually used.”
Since PalQuote is a web-based platform, it can be accessed anywhere with an Internet connection. “It’s a sales tool, and a lot of sales forces are mobile,” noted Grinwis.
AMS just recently began marketing PalQuote to other businesses. “We have a few customers who have done trials,” stated Grinwis. “The feedback has been very positive.”
Editor’s Note: For more information about PalQuote or to arrange an online demonstration, contact Kevan at (616) 635-1610 or email kgrinwis@automatedmachinesystems.com
