Volume 5 | Issue 6 | Year 2002

Pallet Management Systems, Inc., of Coral Springs, Fla., is part of a $6 billion U.S. industry with about 3,600 competitors providing 475 million new and 300 million re-conditioned pallets for the nation’s shippers. About 175 million more pallets are sent to landfills each year, enough to circle the globe five times. As a leading provider and manufacturer of standard and custom-built shipping pallets and containers for a wide range of industries, Pallet Management Systems is helping to reduce that burden on the environment and improve the customer’s bottom line with its uniquePALLETNET™. This Web-based asset tracking system provides for the systematic tracking, retrieval, sorting, repair, warehousing and return of packaging assets. The unveiling of this service coincides with the firm’s major reorganization, which involves aggressive marketing initiatives, new product offerings, entry into new markets, and recruitment of leading industry executives. Through these new initiatives, Pallet Management Systems is well on its way toward revolutionizing what has been regarded as a “cottage industry.”

“We are marketing PALLETNET very aggressively,” said Pallet Management Systems President and Chairman of the Board Robert Steiler. “But the introduction of this product is just one aspect of a total rebirth of our company involving technology, customer service initiatives, the finest quality control systems in the industry, and the most sophisticated manufacturing capabilities. We’re targeting a wide variety of potential customers, ranging from Fortune 1000 companies to smaller organizations that place a premium on safe and efficient shipping. Our general goal is to change the perception of pallets. They should be treated as assets. Even if pallets are not classified as assets by accounting departments, when they’re lost, that still amounts to money going out the door.”

One aspect of this “education” program is PALLETNET, said Steiler. The system is supported by an advanced technology that improves shipping controls and cuts costs and waste in the supply chain while also reducing inventories. PALLETNET, coupled with the Internet, is a browser-based user interface with three levels of security management for unlimited, safe access to determine the exact locations of shipping platforms and containers in the supply chain at any given moment. Since its recent introduction, PALLETNET has had a significant impact on customers’ perception of pallets and containers.

“Many of our customers recognize the value of this system and how it can positively impact their bottom line,” said Vice President and Chief Financial Officer Marc Steinberg. “Until recently, pallets were viewed as an expense and were routinely discarded and lost. Now, customers are seeing the benefits of purchasing more durable and reliable shipping products. For example, they are able to dramatically reduce their shipping costs.

“Customers now see pallets as an asset — like computers or manufacturing equipment,” said Steinberg. “Our mission has been to educate the customers on these reusable assets. Once they see the value of pallets and the savings they can realize, the implementation of the PALLETNET is almost a foregone conclusion.”

The asset tracking system also offers a full range of customized options to configure with a customer’s products and procedures. PALLETNET can use either bar codes or radio frequency identification tags to track individual pallets and the equipment they hold. Shippers are now able to manage an efficient reverse distribution operation and management of valuable transport packaging from any location that has Internet access. “The great thing aboutPALLETNET is that it’s industry non-specific,” said Steiler. “The software can be used with other conveyances.”Pallet Management Systems’ confidence in PALLETNET’s effectiveness is so high that it guarantees a 15 to 50 percent savings with its use. If the savings are not achieved, the client does not pay.

More than three decades of growth and achievement
Since its founding in 1966, Pallet Management Systems has become an industry leader with almost $50 million in sales in a fragmented, highly competitive market with many small, regional operators. Over the years, the dynamic company has raised the bar for quality standards in what previously has been regarded as an unsophisticated industry.

The Coral Springs headquarters oversees production with 200 employees in plants and offices in Raleigh, N.C.; Plainfield, Ind., and Lawrenceville and Petersburg, Va. The recently reorganized company feels it has a competitive advantage with its strategically located manufacturing and distribution facilities. Another distinct advantage is the company’s ability to manufacture custom pallets in a stringent quality controlled environment that is setting new standards for the industry.

“We have developed an industry-leading custom design division that builds pallets to meet the stringent requirements of clients shipping unique products,” said John Lucy, who heads up sales and new business development. “This is a particularly valuable service, since it adds another layer of protection in the safe and efficient shipping of products.”

This approach to custom manufacturing complements a variety of other capabilities offered by Pallet Management Systems. For example, the company is one of only two companies in the United States to have installed the innovative Vanderloo assembly system. This $1.5 million customized design system manufactured in Holland allows for the computer-controlled design and premium-quality construction of pallets.

Steiler described it as “a state-of-the-art, three-sided house machine” that actually doubles the production rate of the standard mechanical nailing machines which it integrates through computerized controls. Through the company’s Pallet Design System (PDS) and an industry leading auto CAD LT™, Pallet Management Systems can incorporate a client’s specific requirements into a pallet or container that meets unique packaging criteria.

The manufacturing process for pallets is the most capital intensive part of the business, and Pallet Management Systems has what is generally regarded as the industry’s state-of-the-art plants. Through its numerous automated and custom-design systems, the company can produce up to 2,000 pallets in an eight-hour shift with about 10 workers, a pace that is regarded as the fastest and most efficient in the industry.

This ability to customize pallets and containers is another reason it represents organizations in a wide range of industry sectors, including food and beverage, steel and metal, chemical and fluid, paper and fiber, automotive, furniture, pharmaceutical and printing. Some of the pallets produced are uniquely engineered to transport specific products. These “niche market” items have lower volume but higher margins than the standard models. “In many cases, we’re seeing that a pallet isn’t just a pallet,” said Lucy. “Many of our clients come to us with challenges involving the construction of pallets that are appropriate for only their products. Our design team responds with one-of-a-kind pallets that are used only for certain applications. This is just one of the capabilities we bring to the table as a single resource.”
Other services of Pallet Management Systems include third party management, packaging retrieval programs, export packaging, warehousing and sorting.

The anatomy of a pallet
A quick look at the overall pallet/container industry clearly reflects the importance of these products and the need for sophisticated business practices being introduced and refined by Pallet Management Systems. Industry sources report there are more than seven pallets for every person in the United States. They come in a thousand different sizes and specifications, but the grocery industry, which accounts for about one-third of all new pallets produced in the country, uses a standard 48-inch x 40-inch model weighing about 45 pounds and designed to hold 1,500 pounds of goods.

According to the National Wooden Pallet and Container Association, 91 percent of shippers report they use wood pallets with plastic and combinations of plastic and other materials amounting to about five percent. It is estimated that 70 percent of wood pallets are made of hard woods such as oak, poplar, alder and gum. There is minimal demand for materials other than wood, said Steiler, who explained that none has achieved the strength and low cost of wood. “Because of the desirability of wood, we continually find better ways to build them,” he said. “However, we can also arrange for the construction of pallets and containers made from other materials.”

Build stronger to last longer
The generally mature pallet industry has had to adapt to significant market changes in recent years created partly by the focus of Fortune 1000 businesses on improving the efficiency of their supply chain and manufacturing and distribution systems. Some companies have greatly reduced the number of vendors serving them in order to simplify their procurement and distribution processes. Large firms also have been prompted to outsource key elements of processes that are not within their core competencies and to develop just-in-time procurement, manufacturing and distribution systems.

Because of these shifts in operational strategy, expedited product movement has become increasingly important and the demand for more efficient distribution of higher quality pallets has increased as a way to decrease product damage during transport and storage and to increase the lifespan and number of trips per pallet.
Environmental and cost concerns also have accelerated the trend toward increased reuse or “recycling” of pallets and certain other transport packing materials, further increasing the demand for high quality pallets.

These trends have resulted in Pallet Management Systems becoming a one-stop resource for all pallet and container needs. “The key element is that all services related to manufacturing, custom design, customer service, and reverse logistics systems are all under one roof,” said Lucy. “This is particularly comforting to our customers who rely on these services for the safe and efficient movement of products.”

A new team and new strategies
During fiscal 2002 Pallet Management Systems hired a completely new senior management team. Steiler, who served as a consultant before becoming acting president and chairman of the board, said the ongoing reorganization is due to the opportunities the company sees for both the long and short terms. “Our goal is to keep pace with growth and the demands of our clients,” he added. “They expect the same sophistication from us that they see in their own businesses. It all starts with people. Our senior management team is made up of the finest people in the industry, who are responsible for developing systems and products that are truly unique.

“We’ve revamped our customer service and IT departments and made changes in our quality assurance program. Our focus is also on sales. We’ve also revised and modified our system of producing pallet estimates.”

The key focus for Pallet Management Systems is to be a single pallet resource and alter the perception of pallets and demonstrate to customers that they are critically important for all industries in this country. “Pallets are critical elements in the safe and efficient transport of materials,” explained Steiler. “We are a one-stop resource for our client companies by offering them a wide range of services. We can create custom pallets through our design division; we can arrange warehousing and delivery to virtually any location in the country, and we can monitor pallet inventory and repair and recycle them so they can be used numerous times.” As companies continue to seek ways to cut costs by building efficiencies into all business systems, the capabilities of Pallet Management become increasingly relevant.