Sometimes you never know the future until you look at the past. Recently, I received a copy of a presentation that my father made in 1991 to the Canadian Pallet Council (CPC). The title of his talk was, “What if the CPC Disappeared?” It’s not that my father is a prophet, but he understands people and pallets.
The CPC was the Canadian grocery industry exchange pool that lasted for almost four decades until it closed up shop in the summer of 2015. My father, Ed Brindley (founder of Pallet Enterprise) said, “You have what is viewed in the USA as the Model Pallet Exchange System.” But that model fell apart as grocery retailers one by one dropped the program until the system lost critical mass.
When the U.S. grocery industry looked at pallet management issues, it concluded that a CPC-like system would ideally be the best. My father commented to the CPC, “They admit that it would save them more money than a third-party rental system. But they believe it will require them to take a more active management role. They want somebody to come in and take away their headaches…The truth is that any system which requires keeping up with a flow of pallets will require that people keep records.”
Pallet rental companies suggest that they get rid of your headaches. I have always maintained that they just give you different ones. Yes, they offer some significant advantages too. You just have to realize that you are giving a lot of control and leverage to them where there truly is limited competition.
Everyone wants quality, but nobody wants to pay for it. One of the reasons that the CPC floundered was the disparity in quality control among members. Some did more than their fair share and felt this was a competitive disadvantage. Others did less and seemed to get away with it. Better monitoring systems were put into place. This didn’t fully fix the problems while it led some companies to look for the exit.
It is interesting how the CPC fell apart. Major retailers and manufacturers left one by one. PECO entered Canada as CHEP grew stronger. Most importantly retail philosophy in Canada morphed to follow the opinions held by retail executives in the United States. My father warned about this in his 1991 speech. He forecasted, “What happens in the United States has always affected Canada, but the effect will be greater under increased free trade. The world is shrinking. In our case, the border is so close that these consequences are almost automatic.”
The North American pallet industry transitioned from the stringer to the block pallet led by pallet rental companies pushing true four-way entry. Rental companies innovated and morphed. CPC made changes, but it struggled to move efficiently the way that a single company can. Looking at CHEP, I have felt that it always had four main things going for it – unity as one company unlike a large cooperative with many players, a hefty bank account, smart people and the audacity to make a system work. Sure, the industry has some of those things, especially smart people, but it lacks the unity crucial to make anything work well.
My father explained in his CPC speech, “The U.S. grocery subcommittee admits that a CPC-like system is probably the best solution, but they do not think they can make it work. They do not think that they have enough control over the people and conditions.”
He added, “You can blow all the smoke you want, but it all comes down to committed people. It takes commitment. It takes training. It takes an incentive.”
The most successful exchange pool in the world is the EPAL system in Europe, which has been around forever and was ingrained in its supply chain from almost the beginning of modern logistics. Maybe Americans are too individualistic and maverick to make something work. But I know this. To achieve something great, you seldom do it alone.
Why read this speech and go through this exercise? I think the reason is that we can learn a lot about the future from studying the past. We can discover our flaws and see how some of our problems have always existed. For example, while doing research for our recent human resources report, I was stunned to read the opening of statements of our first report in 2001. This is what my father wrote, “Ask any pallet manufacturer or recycler to list problem areas. Virtually every one of them will include recruiting and keeping good people in their list. Often it will be the #1, probably averaging as high as virtually any other concern.” That was written almost two decades ago. And it certainly is true today. Things don’t change that much in some ways. But in some ways, they do. For example, e-commerce is dramatically affecting logistics and increasing speed to the customer. Everything has to be just-in-time any more.
The second connected truth is that things do change over time, seemingly gradually until it reaches a tipping point and produces almost a sea change overnight. The thing the pallet industry must do is listen to customers and keep up with their wants, even those things they don’t know that they want. How are we innovating? How are we studying customers to see what the future will be like?
People have been forecasting flying cars since I was kid. I remember the Jetsons cartoons, wishing I could drive a flying car. Still no flying cars yet. But computers have changed everything with the Internet and the smartphone in your hand or medical technology dramatically improving length of life. I believe the future will be created by those who study the past and learn from it.
Consider reading the speech. We have placed it on the home page of our website titled “CPC Speech 1990s”. Let it take you back to the future and dream about making a better industry. How can we innovate the next iteration of a pallet network? It might be much different from the CPC. The question is, “If we build it, will they come?”
