Seeking to take advantage of changes in the logistics industry, a number of successful regional recyclers have joined forces to develop a national service provider called Premier Asset Logistics Network, LLC (PALNET). Even though these regional pallet companies have enjoyed good business relationships with their customers, in many cases long term partnerships, they could now be better served by a national level service.
The development of PALNET reflects the changing reality of the core supply in the country. "The industry has been changing. More and more retailers are becoming national players. Pallet cores are going to recyclers that can service national accounts," said Michael Smith, the COO of PALNET. If you want to know what is going on, all you need to do is follow what the major retailers are doing.
PALNET combines the resources of nine major recyclers across the country with 28 facilities and more than 1,000 full-time employees. According to Michael, all of the companies are not only successful regional pallet companies but also are among the most progressive leaders in the industry.
The owners of PALNET each contributed capital and are the service providers in their region to service national accounts. They get the benefit of a large network without having to give away control of their individual companies. Developing a truly coordinated business model among a group of entrepreneurs has been one of the biggest challenges in the past for entities like PALNET. Michael said that PALNET has already solved those issues due to its structure and balanced management approach.
PALNET is a new asset management company committed to serving the growing market for national pallet dock sweep programs as well as related asset management and recovery offerings. Its initial emphasis is to provide coast to coast pallet dock sweep services for large national companies. Such programs will include excess pallet purchase and removal, pallet sortation, repair, supply, and other customized solutions including logistics services.
PALNET offers centralized reports via its online asset tracking and account management software. Customers can have one contact for all asset related activities instead of multiple contacts depending on the region.
Michael said that PALNET will give the customers what they want when it comes to pricing strategies. "We will customize solutions for our customers evolving needs." According to Michael, PALNET has been very well received and they are in final negotiations with several national customers.
Many recyclers may be curious if they can get in on the action. Michael said, "We are not looking for partners or investors, but we will be looking for strategic alliances as needs develop and we will be making the appropriate contacts at such a time."
Before agreeing to take the helm of this new startup company, Michael Smith worked as director of operations for PECO, a national pallet leasing company in the U.S. Michael also was a director of distribution for two national grocery manufacturing companies before joining PECO.
PALNET was conceived just two short years ago. The company officially formalized and launched in Feb 2005 and has just begun to publicize its services. With its headquarters in Newcastle, Del., PALNET may be a name you hear a lot more about in the future. To find out more, visit its Web site at www.palnetusa.com.
SIDEBAR
Are Networks for You?
Many leaders in the pallet recycling industry have been talking about the development of white wood networks to deal with changing customer demands. Some are for it. Others are dead set against it. Still others are too busy with the day-to-day operations of their business to worry about it right now.
The fact is that companies able to service national accounts either on their own or through networks stand a greater chance to get business in the future. There are two reasons for this. First, many companies don’t want a lot of little vendors anymore. They want only a few vendors at the most. They want consolidated billing, one-person contact, etc. They want online account management and just-in-time service. Customers want solutions, and they want efficiency – which can be achieved through larger organizations.
Second, and maybe more important, the retailers are increasingly controlling what happens to pallets as they flow down stream though the supply chain. Retailers used to manage their pallets at a local level. This function has been moved up the corporate ladder where now the decisions are made by senior management. Localities may not always follow these decisions. But retailers are claiming that they want to work with a few skilled recyclers, not hundreds of little ones. Whoever gets these accounts ends up with the pallets. And as we all know in the recycling industry, core is king. He who has the pallets will get the business and grow.
While developing a network is certainly possible because it has been done before, it is far from easy. Rugged individualism and entrepreneurial spunk is part of what has made many companies in this industry successful. These values can also get in the way as organizations try to develop networks. Some guys in the system may try to cheat the specifications, which has become a fine art in the pallet industry. Others may not give enough resources to make network business accounts work. Local accounts may get preferential treatment as companies try to balance competing interests.
Some view the whole networking idea as a fad that will fade away. They don’t think it will work because of human nature. They also think that for every success there will be a lot more failures.
Could this really be an issue of desire? The company that desires it the most will win the prize. Anything worth having in life comes with risks. And if you never take the risk, can you ever have the prize? Beyond mere philosophical questions, these issues start to feel real heavy when you weigh the future of your business in the balance.
The pallet industry consists of mainly small players run by entrepreneurs. And yet the fragmentation of the industry continued to remain a stumbling block for the white wood exchange market. Users are looking more and more at pallet rental or centralized buying white pallets through a large, national organization. Local guys may get left in the dust if they do not pioneer new ways to do business. Then again, if your customers are happy now and you have ample core supplies, I can see why some would shy away from the risk.
Is it better to fly solo or team up? You make the call.
