Michael Lamb is chief financial officer of Pooling and Logistics Experts, which does business as PalX. PalX is a new company that is launching a wood pallet pool equipped with tags to track supply chain data. Initially it is targeting regional customers with special logistics requirements, such as pharmaceuticals, cold supply chains and secure supply chains.
Pallet Enterprise: What is the best piece of business advice that you have ever received?
Lamb: Change is a constant and businesses cannot stand still. You have to be prepared to adapt and change as the conditions require.
Pallet Enterprise: PalX is focused on customers that require or can benefit from sensors on pallets for tracking location, temperature, and shock and vibration. What trends do you see in the supply chain in the next 2-5 years that will drive the need for this type of information?
Lamb: Over the next 2-5 years, initiatives such as Industry 4.0, Industrial IoT, block chain and supply chain visibility will come to the forefront in supply chain management. Our sensors will revolutionize and integrate into supply chains by providing end-to-end visibility and environmental condition monitoring from the unit load level.
Pallet Enterprise: Can you give a few examples and provide an economic case for the need for this level of pallet tracking?
Lamb: A recent U.S. Fast-Moving Consumer Goods industry study reported product damage accounts for an estimated $2.5 to $15 billion in losses a year. Using strawberry spoilage as an example, there is a potential of saving approximately $0.4 billion alone for that type of fruit. By tracking the product from farm to retail store with timelines, dwell points, temperature and shock reporting capabilities, PalX can significantly improve shelf life and product damage.
Pallet Enterprise: A lot of businesses and industries may not need a high-tech pallet that can capture this kind of data. Can you tell us the size of the market for the PalX pallet and what industries or applications it is best suited for?
Lamb: The size of the pallet rental market is $3.2 billion a year in revenue. The PalX pallet with sensors is a 3-phase program. In the first phase the sensors will be used internally to control PalX pallets. The second phase is planned to be customer-facing to minimize pallet losses, control inventories, reduce product damage and increase shelf life. The third phase of the sensor program will incorporate big data reporting and block chain integration. Our pallets are best suited for customers who require dimensionally consistent high-quality pallets in the Fast-Moving Consumer Goods supply chain. Not all customers may opt to use all of the reporting capabilities of our sensors but will benefit from the overall tracking capabilities to reduce pallet losses and dwell times.
Pallet Enterprise: Years ago, Walmart mandated RFID tags for pallets, but that initiative fell flat. How has the supply chain changed since then? How is your technology different from RFID?
Lamb: The supply chain has changed significantly by incorporating digital technologies with initiatives such as Industry 4.0, block chain and the Industrial IoT. Our technology is differentiated from RFID by incorporating environmental condition monitoring capabilities, such as temperature, shock and location. In addition, each pallet carries its own unique identifier. These added-value services will reduce costs in the supply chain for PalX customers.
Pallet Enterprise: Your former employer, CHEP, has experimented with tracking for years, but it has yet to make a big push. Why is PalX better positioned to lead in this space?
Lamb: CHEP’s size and legacy systems are potentially an impediment to incorporating new technologies across its whole pool. This is despite its recent announcement of the RFID plastic pallet initiative with Costco, which represents 10% of its pool. For CHEP to retrofit approximately 85 million aged pallets with tracking technology would be difficult. PalX’s business will be built around new and emerging technologies.
Pallet Enterprise: More data can lead to more information to wade through. Companies get too much information and drown in it. How will you help customers actually use data and integrate it with their information systems?
Lamb: PalX views smart pallets as a service that will provide end-to-end visibility enabling the market to get smarter and more efficient through actionable data to reduce spoilage, optimize inventory, and quickly react to demand trends. Location reporting will improve efficiency in transport lanes and miles as inventory is more effectively managed and spoilage reduced. Its planned data can be tailored by the customer, who can integrate what their business requires into existing Warehouse Management System and Transportation Management System software solutions.
