Quality. Quality. Quality. It certainly is not the buzz word of the moment. Today pallet and lumber customers seem to be focusing on one thing – price, price, price. But smart suppliers know that you have to stay one step ahead of the customer. It isn’t always what customers are saying now. The most important thing may be what they will be clamoring for down the road.
The emergence of new palletizers, Automated Guided Retrieval Systems (ASRS), high speed conveyors and robotic materials handling point to the need for a higher grade pallet in some operations. While these advancements are not new, the rate of application is increasing, especially in the fast moving consumer good supply chain.
It may be time for the pallet industry to rethink its approach to pallet standards and quality. CHEP USA, the largest pallet rental company in United States, recently launched a new two tiered approach to its pool. CHEP now offers a “US Plus” which is an upgrade to the current pool as its new minimum quality level and a “US Premium” pallet specification for highly automated facilities requiring extremely tight specifications.
If CHEP is moving away from a one-size fits all approach, maybe the white wood industry can learn from these shifting trends and be ready as some customers demand a lot more in terms of quality than they ever did in the past. Sure, there will always be the majority who merely want the cheapest price. But there may be more customers who will be willing to pay more for quality in the future if they can be guaranteed that they are getting what they have paid for. That’s where the need for effective third party auditing and oversight comes in to play.
The most recognized name in the pallet industry when it comes to quality and other auditing services is Timber Products Inspection Inc. (TP) of Conyers, GA.
TP is an independent, third party wood products inspection, testing, and consulting company with field representation throughout the entire United States. Started in 1969, the company is now owned by Ronnie Williams and Jim Respess. TP today has about 95 people on staff serving customers all across the United States. Beyond sending auditors into the field, TP maintains state-of-the-art chemical analysis and physical property laboratories to analyze wood for chemicals and ensure quality.
TP has performed quality audits for some of the leading pallet companies in the country, including the major rental pools or management companies, such as CHEP, PECO, Ongweoweh, The Nelson Company, First Alliance, PalNet and more.
Traditional pallet failure or product damage is not the primary quality concern today. Bryan Smalley, wood packaging material/pallet programs manager for TP said, “What is driving TP’s pallet quality programs right now is not necessarily breaks or pallet failure but more commonly pallet integration into the supply chain…What is happening is that the palletizers out there are getting much more restrictive on what they will allow.”
Breaking it down even further, Smalley said, “The dimensions are getting very tight, especially if you are talking about the variability of repaired pallets being used on palletizers with all these specific red eye functions. Certain spacing is needed in order for the palletizer to see where to load the product. The big issue is generating a pallet that will not slow down or cause a palletizer to malfunction.”
Smart pallet companies should get to know the distribution facilities and practices of major customers. This will help you know if your pallet specification may cause problems with automated equipment. You don’t want to find out the hard way.
Daniel Bonamie, vice president of quality assurance for Ongweoweh, said that he doesn’t really see the customer attitudes changing that much in terms of quality. The big difference is that customers are more educated on the process.
The SPEQ™ Program
If you’re going to talk about industry-wide quality control efforts in pallets, you have to start with the SPEQ™ program, a quality initiative developed by the National Wooden Pallet & Container Association (NWPCA) in the 1990s. Since the program’s inception, TP has managed the inspections. The idea behind SPEQ is that a pallet is custom designed to individual applications using the Pallet Design System (PDS) software. The pallet supplier manufactures the pallet to the specification, and TP conducts regular audits to ensure that everything works as guaranteed.
Back in the early stages the SPEQ program had about 100 companies involved. But participation has dwindled down to about 10 companies today. Smalley of TP said “The idea of the SPEQ program works. Of course, you need to have some pull through with customers requesting it.”
That was the big problem with the SPEQ program. Customers wanted quality, but they didn’t want to pay for it. If you’re in the pallet business that problem should sound familiar. A few forward thinking shippers did see the need for it, especially those operating closed loops.
Probably the largest producer of SPEQ pallets in the country is The Nelson Company headquartered in Baltimore. Md. One of Nelson’s largest customers buys SPEQ pallets because they are guaranteed a high quality pallet.
David Caltrider, president of The Nelson Company, said, “It’s actually a pretty big part of our business…“The SPEQ pallets that we put out there in
the market will outperform what others supply.”
Nelson has setup a network of satellite sites to manage a closed loop pool for some SPEQ customers. Some new pallets are produced by other business partners. But all repairs are done by Nelson at its facilities.
Captive pools of reusable wood pallets provide customers multiple trips. Caltrider said, “While our SPEQ customers may be paying more for a new pallet, they are getting what they pay for. Everybody else is trying to shave 1/8 of an inch of the deckboards, this denigrates the quality of the entire white wood pool.”
TP will come in and do quarterly inspections. Inspectors will monitor various aspects of production including: the quality and performance of repair, the number of nails per joint, the type of fastener, the species and quality of wood, and shiners and other manufacturing defects. Caltrider said, “TP is like having an extra set of eyes for management. And they do a very thorough job.”
Working with a third party audit agency, such as TP, gives your program credibility. Caltrider said, “TP has been very good to work with from the start. They explained to our customers how the program works.”
Despite minimal demand for SPEQ pallets, some pallet companies have stayed in the program because they believe in it. Jay Moore, vice president of operations for TP, said, “Those who have stayed in the SPEQ program have done so to use it as a marketing tool.”
Quality Program Insights
Quality is not rocket science. But it does require consistency, monitoring and discipline. The quality of the raw material is a major consideration for any pallet company. Smalley said, “If you can control your incoming supply, you have done a lot of what you need to do in terms of specifying the entire pallet.
Since TP also handles inspections for grade and treated lumber, its field personnel know the lumber grading rules and how to spot defects. TP will perform complex analysis on the raw material supply if necessary. Smalley said, “The most comprehensive audit program we do involves component grades as well as the component species. We do chemical analysis of the material to make sure it is free of certain chemicals.”
The frequency of visits depends on the volume. The larger the volume, the more frequent the visits to achieve a workable confidence interval to ensure proper quality.
The focus of the inspection depends on the process. Moore of TP said, “If you are looking at a new pallet, you are trying to make sure that they are using the right type of lumber and nail and that it is fabricated correctly. When you look at recycled pallets, you are looking at it a whole different way. You are looking to make sure that they actually repaired the damages that were there.”
Repair audits and controls tend to be more difficult than manufacturing because there are a lot more variables to consider. The criteria for repaired pallets usually include things like minimum dimension sizes for deckboards, exclusions for what species can’t be used, gap spacing between deckboards, etc.
TP used to do the quality control inspections for CHEP’s repair depots before the company instituted a new program and hired its own internal staff. Although TP continues to work with the rental giant, its focus has changed to raw material supply quality control and supplier development activities over the past two years.
Skip Miller, vice president of quality for CHEP USA, said, “CHEP has enjoyed a long-term relationship with TP…Our current arrangement is very collaborative as TP provides the critical oversight for all CHEP USA supplier mills in the US and South America. That includes grading, heat treating and related inspection services. Thanks to TP, CHEP can ensure that the wood raw material supply in our product consistently meets our specifications, so we can in turn deliver consistently high quality pallets to our customers.”
Full Service Inspection Firm
TP has grown to provide auditing services to meet the needs of most wood products operations. This includes: grade stamping facilities, pressure treating facilities, heat treating facilities, panel manufacturing facilities, pallet manufacturing facilities, log/timber frame manufacturing facilities, truss manufacturing facilities, utility product manufacturing facilities, green building programs, and engineered products manufacturing facilities.
From inspections to training to lab tests, TP offers a wide variety of services. For years, industry companies have turned to TP as a partner in education, especially when it comes to grading rules or audit processes. Classes are taught by hand-picked industry veterans representing the highest levels of knowledge and experience.
TP’s in-house chemical lab specializes in testing wood preservatives, adhesives, wood contaminants, etc. The lab has four full-time and two part-time certified chemists, working to provide the highest level of service. This means short turnaround times, environmental analysis and certification assistance tailored to each customers’ needs. TP also has a physical lab to perform a wide range of tests to determine physical and mechanical properties of clear wood specimens.
Capitalizing on the green movement, TP recently added Sustainability Forestry Initiative (SFI) certification services. Of course, TP is one of the major auditing firms for the ISPM-15 treatment and certification program in the United States.
Why choose TP? It has a nationwide staff on-call to meet your needs. TP also boasts an extensively trained staff of professionals who perform audits full-time. Since TP does so many things, its field staff must be aware of many technical areas. Smalley said, “Our inspectors are out there in every aspect of the industry from primary producers to end users.”
Moore said that “Customer service and technical knowledge” set TP apart. He added, “We believe that we are more technically sound, we have a good training program, everybody that goes out in the field knows a lot about wood and lumber.”
Obstacles that Diminished SPEQ’s Market Acceptance
SPEQ delivered on its quality promises. But it struggled to gain market acceptance and customer pull through. Smalley said that leakage was a big problem. He explained, “You build a good quality pallet and never get it back, but with the EPAL program you do.”
The industry needs a quality management system in place that includes tracking technology, staff oversight and cooperation among players. A group of recyclers from the NWPCA is working on this concept as it seeks to develop a white wood alternative to the rental pools. Called the Pallet Industry Management System (PIMS), this initiative seeks to build a quality standard into its specification. While the PIMS program is still in the development stage, it has attracted the attention of some major end users. Beyond management controls, Moore said, “One of the big problems was nationwide species availability, which hampered the SPEQ program.”
Alder is a pretty common species on the West Coast whereas the East Coast is dominated by mixed hardwoods. Through the years some West Coast operations have complained that PDS requires thicker boards for the same pallet as mixed hardwoods used in the East. By contract, the Europeans have fewer species to confuse the issue.
Jay said, “If the industry comes up with a quality pallet standard it must work with all the species that are readily available…You need a prescriptive standard. Any standard must be very simple.”
Shippers that made the TP quality inspection programs work were usually happy with the outcome. Smalley said, “Without a doubt, customers that bought a TP-inspected pallet had a much higher degree of confidence in that product.” He recounted one major beverage manufacturer that has used wood, TP-inspected pallets for years that has 7-10 year old pallets in circulation.
Setting Up National
White Wood Standards
The two major components of any quality inspection program are the quality of the lumber and the workmanship of the pallet. Inspectors will want to check things like the quality of the fastener, the lumber and the assembly of individual pallets.
Bonamie of Ongweoweh said that fastener issues have been one of their biggest quality problems for third party operators. He said that you generally cannot expect the same performance from collated nails as bulk nails. This is primarily an issue of wire diameter and limited thread. Bonamie said that there are collated nails on the marketplace that provide adequate performance, but you have to specify every little detail to make sure that quality components are used.
Having managed a fairly large SPEQ program, Caltrider of The Nelson Co. said, “It is our belief that if you are going to do repair, you need to do it yourself.” Nelson operates repair facilities in eight states although it will partner with other companies to manufacture SPEQ pallets.
There are so many variables to consider in pallet repair that it can be difficult to trust that another company will look at everything the same way that you do. Caltrider said, “If you are going to an industry wide pool, you will need a third party audit system to look after quality of pallets instead of your own best interest.”
Moore of TP said that you actually need multiple levels of enforcement and oversight. He said, “You need somebody to stay on top of the auditors and to monitor the agencies.” He pointed to the oversight that the American Lumber Standard Committee has for the heat treatment program in the United States as a good example.
Moore added, “There has to be a level playing field. There has to be a set of succinct rules that everyone can follow.”
Monitoring Heat Treatment Practices
Any new major industry quality standard will likely require that the pallet be ISPM-15 certified. TP just so happens to be the largest certification agency for the U.S. heat treatment program.
Bonamie said, “We grew with TP. They have been extremely helpful in other areas, such as auditing HT pallets.”
Smalley claims that their familiarity with lumber grading and quality helps set their inspectors apart when it comes to the heat treatment program.
Looking specifically at existing challenges to the HT program, Moore said that counterfeit activity and fraud is a major problem. He said, “Although I think there is a lot more fraudulent activity out there than has been identified, the USDA, ALSC and TP will continue to work hard to prevent it.”
Even companies in the official programs are having a difficult time with some provisions. Smalley said, “The recycle pallet market is ripe with transition. It is difficult to obliterate old marks as pallets go through the repair lines. It’s always one of our top priorities to keep our eyes on that issue.”
The Future of Quality
Moore of TP said that he believes quality standards will become a bigger deal in the pallet market in the future. But he also said that if you asked him when the SPEQ program launched the same question, he would have never thought it would have lost momentum.
The best way to know what will really happen is to talk with your customer and see how pallets are actually performing in their increasingly sophisticated materials handling environments. So have you talked with your customer recently about quality? If you are afraid to due to quality concerns, that should tell you something about how the industry may be situated to tackle the future.
