Just when it seemed that the white wood pool was going to go down for a final 10 count, a bucket of cold water stirred it back to consciousness. It is battered and bruised, but it hears somebody talking — it’s the mighty Wal-Mart, and the retail giant says it might actually give white wood a legitimate shot at a title bout. White wood might still be a contender after all.
Pallet Profile Weekly recently reported the astounding development that Wal-Mart is said to be looking at the possibility of a white wood exchange pool as a viable option to CHEP. Wal-Mart has never excluded non-CHEP pallets, but it has billed suppliers for poor quality pallets and steered them toward CHEP. By expanding its endorsement to include white wood in addition to CHEP, Wal-Mart would be giving its suppliers more options introducing greater competition into the marketplace.
For a white wood pool to have a decent chance of succeeding here’s my perspective as a pallet user involved in running a grocery distribution center – shatter the paradigm.
Any alternative to CHEP should as its main goal strive to reduce costs for pallet users. If white wood programs follow the current rental model too closely, they will be doomed to languish as also-rans. In order to succeed, they must throw away the rental template and provide customers with greater value than they receive from the current system.
Another key to remember – multiple white pallet systems are not an option for distribution centers. Most distribution centers already are starved for space and especially for warehouse doors, which are at a premium. In any warehouse where pallet sorting takes place, a door typically is assigned for each type of pallet, and it is occupied by a trailer van. It is hard to imagine that any more doors would be available for a white pallet alternative. Using more doors for a pallet program would put more strain on a warehouse and could even hasten the need to expand. If a white pallet program is going to work, it is going to have to function with the same number of doors that are being used now at Wal-Mart distribution centers. In fact, I am only thinking out loud, but it is entirely possible that the overall cost to the grocery system (including door utilization) may be greater for supporting multiple white pallet programs than any savings that copy-cat pallet systems might provide.
How can a white pallet program beat the proprietary pallet rental system? I don’t pretend to have all of the answers. But if it is based on some of the strengths of the existing white wood system, the white pallet program will already be laced up and ready to rumble.
One clear advantage of a white pallet program would be lower freight costs. Because of their ubiquity, white pallets for a Wal-Mart or other pool can be drawn or withdrawn as needed from the larger white wood pool. It could function like a giant pallet bank, which it does to some degree already.
In a similar vein, a white pallet program may be able to eliminate the requirement of CHEP customers to pay for empty pallet return from a distribution center. The capability of pallet exchange is still extremely popular with many grocery industry suppliers; it allows them to forego the logistics of one-way rental and depots while enabling them to bring back a load of pallets on trucks that would otherwise return empty.
A white pallet program also would have the advantage of relatively open access to pallet purchase and repair services. Competition has been at the heart of the enormous productivity gains that the pallet industry has made, and it the enduring value that the pallet industry passes along to customers.
Sure, there would be issues about quality consistency. Solve them. An automated system of identifying Wal-Mart pallet suppliers would cause any quality problems to flash back through the system like a vicious uppercut.
Sure, there would be some information technology requirements and other challenges. Solve them. More and more Internet-based pallet tracking solutions are emerging every day. Check them out, and let the training begin.
Excuses won’t do anything but get the white wood industry whipped in the ring. Recyclers must work together to find solutions to customer problems – do it better, cheaper and leaner. The next round promises to be packed with drama.
Round II – Ladies and gentlemen, in this corner…
