N.C. Recycler Makes Innovative Use of Information Technology
Microsoft Recognizes East Industries for Application of Its Software Products
By Tim Cox, Editor
Date Posted: 2/2/2004
Not Your Ordinary Pallet Recycler
I had a feeling I was dealing with a ‘different’ kind of pallet company when I received an e-mail from Dave Wilson, owner of East Industries.
At the bottom of his e-mail was all his company’s pertinent contact information: his name, company name, address, phone number, fax number, and his e-mail address. Right above that was his signature – a ‘real’ signature just like you would write your name.
To top it off, when I opened an attachment to his e-mail, it took me to a window for my e-mail software – Microsoft Outlook -- that had all Dave’s contact information already entered into the appropriate boxes. All I had to do was click on ‘save and close’ and the information was captured automatically, making it easy to address future e-mails to Dave or look up his contact information.
I knew for sure I was in a different pallet company when, after driving to East Industries in
What makes the company’s information technology accomplishments (see accompanying article) unique, at least to my mind, is that they were not achieved by purchasing proprietary computer software programs or hiring a consultant (i.e., programmer) to write one for its particular operations. They took popular, off-the-shelf computer software and essentially tweaked it – with the aid of a consultant – to serve their purposes.
The computer programs are nothing more than tools. Like any tool, however, the more you know how to get the most out of it, the more productive it is.
Various types of training are readily available in these programs, from do-it-yourself instructional CD-ROMs and videos, instructional publications, and brief, one or two-day classroom courses.
Another thing worth noting is that East Industries demonstrated that investing in information technology – the hardware, software, training and consulting – can improve a company’s profitability.--Editor
East Industries, owned and managed by president
The company’s main operations are housed in a large warehouse building. The principal activities are repairing damaged pallets for resale and dismantling pallets to recover usable lumber from which ‘new’ remanufactured pallets are assembled. East Industries supplies about 30-40 pallet sizes.
In addition to supplying pallets, East Industries furnishes returnable packaging for some customers, such as top frames and tier sheets. The packaging is proprietary, which further increases the need for accountability in recycling operations. East Industries collects returnable packaging and recycles it for customers – refurbishing it as required.
The company also is engaged in third-party reverse logistics. It has contracts to supply packaging by the piece, contracts that include retrieving, handling and prepping packaging for factory production lines.
A fleet of 120 trailer vans is integral to the company’s operations. As is the case with other pallet recyclers, the trailers are stationed at customer locations to be filled with surplus and scrap pallets. The vans are returned to East Industries when full with another empty one left behind for the customer.
East Industries is no stranger to the world of computers although in 1992 the company had only one desktop computer. The company has used various software programs in the past, going back to old DOS programs. However, it gradually outgrew the benefits of spreadsheet programs, such as Excel, for capturing and manipulating data.
In recent years, Dave recognized the increased need for improved information technology in response to changes in the pallet recycling industry. The changes included so-called ‘reverse auctions’ conducted on the Internet in which pallet suppliers submit bids for contracts. Another change was a move by some businesses to electronic billing. Price pressure and customers were driving the need to manage and extrapolate data about loads of pallets retrieved by East Industries from customer locations. Other factors also spurred the need for improved data collection and management, such as employee piece rate pay systems that require tight controls and the need for strong inventory management so that East Industries could respond quickly to customers.
Dave began partnering with
There are many variable cost factors in pallet recycling operations, Dave noted. For example, the volume of incoming pallets and resulting usable pallet parts and ready-to-go pallets can vary considerably. The biggest challenge to his business has been obtaining accurate information about these various aspects of pallet recycling and keeping track of it.
East Industries does not inventory a large volume of pallets for customers, preferring instead to have the ability to respond quickly – within 24 to 72 hours – to customer requests for pallets. In order to be able to shift gears and respond quickly, however, the company does inventory various pallet and packaging components. In fact, incoming orders are broken down to determine the number of pallets in inventory, the number of components required, and other factors.
Dave was particularly focused on the need to capture – and make use of – information about incoming loads of recovered pallets. Earlier systems did not capture information on many of the variable factors related to each load. Having greater information technology capability would allow East Industries to significantly improve the level of quality and service to customers. The improvements would hinge on the collection and management of data about the contents of incoming trailers of used pallets and packaging, and having the ability to use that information for management decisions and in concrete ways that would benefit customers.
“Our basic business has shifted as a result of the economy,” said Dave. “Key customers are sending us less ready-to-use pallets per truck-load. More pallets need repair, are in pieces, or are just scrap. If I don’t know precisely the quality of the 4,000 pallets coming in each day, the bottom falls out of my bottom line.” The company’s previous inventory management system was not able to provide this kind of critical information.
East Industries relies on a manual approach to sorting incoming pallets, which are segregated according to four main categories. It used a system of debits and credits – to debit or credit customer accounts according to the contents of a trailer-load of used pallets – as long as 15 years ago.
East Industries captures information about incoming loads of used pallets with its Inbound Pallet Transaction Form. Workers sorting incoming pallets fill out a sheet to record the contents of each load, and the office staff uses that sheet to enter the information into the electronic form.
The basic concept of the new system is to record and report on the inbound receipt and grade of various size pallets and packaging. It also tracks the value of the inbound shipments for proper accounting of all transactions.
Reports initially were e-mailed to customers for review and confirmation. Depending on the customer service agreement, the system can track and report what East Industries owes the customer monetarily or in pallet exchange. The value-added service provided a significant competitive advantage, according to Dave.
Although the system met with some success, it did not fully meet the needs of all the company’s customers. Reports sent via e-mail could still be lost or misplaced, requiring information to be reproduced and sent again. In some cases, executives at other customer locations requested additional copies of reports, requiring them to be resent yet again. In addition, the full value of the data that was being captured was not being tapped; there was a need to capture data on incoming trailers in an even more ‘granular’ way. East Industries still had problems because of these inefficiencies in its information technology systems: lost employee productivity, underutilization of its database, inefficient customer service processes, and others.
The solution was two-pronged: using Microsoft Office Access 2003 to improve the capture and manipulation of information about incoming trailers, and establishing a server system that allowed customers to log in and view the pertinent information about their own accounts. Once East Industries employees enter the data into Access, reports are generated through Access Snapshot View or Table View, tied to the customer’s workspace on Windows SharePoint Services. Customers have access to their account information – such as pricing, order and production status, scheduled delivery times, and a snapshot of all services provided by East Industries -- 24 hours a day, seven days a week. That is particularly beneficial to customers that operate multiple shifts, Jason noted. Customers can log into their account and view all their account information with a Web browser program, such as Microsoft Internet Explorer. Customers may have multiple log-on accounts for purchasing agents, managers, and other personnel. They are subsequently notified of updates automatically by e-mail messages or through an ‘alert’ service built into Windows SharePoint Services.
One challenge of dealing with customers, Dave noted, is the turnover of purchasing agents. When a new purchasing agent comes on board with a company customer, he is unaware of the myriad of services that East Industries provides – or can provide. With the new information technology systems, a new purchasing agent can log onto his customer’s account and obtain that kind of information. Essentially, all they need is an Internet connection and a Web browser.
The system “utilizes data more efficiently,” said Dave, “extending its usefulness beyond reporting. Most importantly, customer service and satisfaction have improved.”
With more accurate, detailed information about the contents of incoming trailers, particularly as it relates to pallets and usable parts, can reduce or eliminate the need to purchase new material for pallet remanufacturing and repair. The company’s cost of production was reduced. “With the expanded inventory management solution, we expect to see a 10 to 15 percent cost savings that will come from a combination of more accurate capture of incoming pallet condition, increased customer retention and operations efficiencies via better reporting,” said Dave.
There are concrete benefits of knowing more – not just knowing more about each customer account, but in a ‘global’ sense, observed Jason. His services to East Industries included consulting, setting up the hardware and software, and training office staff in use of the programs. East Industries also invested in high speed DSL (Digital Subscriber Line) service – essentially, a dedicated phone line for a constant connection to the Internet -- for sending and receiving e-mail.
“Dave had an eye to leverage technology to run the company more efficiently,” said Jason. “We took the existing database and recaptured it in the new program.”
East Industries was recognized by Microsoft Corp. for its innovative use of Microsoft Office System 2003 and Microsoft Small Business Server 2003 software products. The pallet recycling company was one of only 25 small businesses globally to participate in a special program for rapid implementation of the new software products.
“I nominated East Industries and they were ultimately selected because they understand the value of investing in and implementing technology into their business planning and operations,” said Jason.
East Industries was one of nine businesses showcased at a product launch event that Microsoft held in New
One focus of the revamped information technology systems was improving communications. Previously, communication within the East Industries office was a challenge, Dave said. “We used the new tools…to make communication more efficient.
For example, in the company’s offices, a customer order can be taken at any of five telephones, which could lend to confusion – even a ‘lost’ order -- if the process were not coordinated. Customers were demanding communications by e-mail and fax to their computers.
Another complicating factor is that personnel taking orders at East Industries are also involved in numerous other and often unrelated tasks. There is a constant back-and-forth with customers over orders, service, and other issues. “In a small business, a lot of people wear a lot of hats,” Dave observed.
East Industries relies heavily on e-mail for communicating with customers. “Customers love it,” Dave reported. One area of customer communications that e-mail is being used for is invoicing. Traditionally, invoices were printed out, folded and inserted into envelopes, address labels and stamps affixed to the envelopes – then put in the mail. Sending invoices via e-mail speeds up the process dramatically and cut costs. “The invoice is there in seconds,” Dave observed.
As part of its billing process, when pallets or packaging are delivered to a customer, the truck driver brings the signed bill of lading back to the office at East Industries. A copy of the signed bill of lading is made with a scanner, and it is ‘attached’ to the invoice that is sent via e-mail to the customer’s staff member who is in charge of accounts payable. So invoices are sent daily, depending on deliveries – not at a certain time each month. As a result, East Industries gets paid more quickly than if companies were sent an invoice at the end or start of the month. A significant benefit is that East Industries receives customer payments faster, improving the pallet recycler’s cash flow.
Dave has personally benefited from his increased use of e-mail for communicating with his staff and customers. “It’s easier to use e-mail than writing things down,” he said. Having to rely on hand-written communications had become difficult because of the many demands and interruptions on his time. “E-mail is much more efficient,” he said. It also improves accountability among employees, he noted, because each e-mail is ‘stamped’ with the time and date that it was received.
East Industries also uses ‘filtering’ tools to screen incoming e-mail for ‘spam’ – the junk mail of the electronic mail kingdom. The filters can detect – and reject – spam.
East Industries makes use of electronic mail for providing customers with digital photographs. A digital camera and e-mail allow East Industries to quickly and easily document damaged pallets or packaging in a trailer, for example. The client business can receive that kind of documentation even before the trailer is unloaded.
Another advantage of the improved information technology is that it allows Dave to do work from a remote location – home. Being the owner of a small business some times requires him to work late, he noted. The technology for ‘telecommuting’ from home was available in the past, Dave observed, but he found it cost-prohibitive. The new technology is more affordable and may be used “right out of the box,” said Dave. Working from home, he can check his e-mail at the office and respond to it, and perform other tasks. In addition, the wireless technology allows him to relax at home with his feet up in front of the fireplace while he works. “It’s a whole different world.”
Another area of communications that has benefited is the office staff meetings at East Industries. In the past, staff members took their own – different – notes as they saw fit. The result occasionally could be miscommunication or lack of communication.
With the Microsoft tools, a task list is projected on the screen while the meeting is in progress. As staff are assigned tasks, one person taking notes enters the pertinent information and it is displayed on the screen for all to see. When the meeting is over, the meeting summary is printed out, and a copy is distributed to each person. “When they walk out,” said Dave, “everyone is on the same page, which is unbelievable to me.”
Microsoft’s e-mail program, Outlook, may be used for managing contact information for people and other tasks. Another feature that Dave particularly likes is that it allows for scheduling meetings with various staff without the need for talking to each one and asking when they are available. The e-mail program also has a feature for managing tasks.
East Industries also makes use of new wireless ‘tablet’ personal computers – the Motion Computing M1200 Tablet PC. Users may ‘write’ notes on the table with a special stylus and Microsoft Office OneNote 2003 software or use it conjunction with a regular keyboard for typing.
The transition to the new technology and system was not without its challenges, Dave indicated. However, once the transition was made, it was well worth it. “Once you get over the learning curve,” he said, “it’s been a breeze…It’s like second nature.” Small businesses can adapt and switch to new technology faster, added Jason.
For all its innovative use of information technology, East Industries employs decidedly low-tech but common methods to pallet recycling. Incoming trailers are unloaded primarily at two docks, with stacks of pallets moved via forklift to a sorting area. Two employees sort stacks of pallets by hand, and the sorted stacks are removed to inventory for eventual resale, to be repaired or dismantled.
In the lumber recovery area, the company operates several bandsaw dismantlers with two workers on each machine. With one worker pushing and the other pulling, the pallet goes across the machine’s table, and the bandsaw severs the deckboards from the stringers on one side. Instead of turning the pallet over and sending it through immediately to dismantle the other deck, the workers set the partly disassembled pallet on top of the machine, then get another pallet and send it through. The first pallet is then put into place to finish the dismantling process, and the second pallet is temporarily placed on top of the machine.
Deckboards and stringers are tossed into a system of connecting conveyors that take the material to a rotating sorting table. Several workers pick through the lumber, sorting the lumber that can be reclaimed and tossing scrap into waste containers. Nearby is a trim saw work station for cutting reclaimed stringers and deckboards to the correct length. The company has other work stations for repairing and remanufacturing pallets.
East Industries previously had its own grinder for converting waste wood into mulch, but Dave discontinued the practice and has resorted to outsourcing. Now, the waste wood is supplied to a company that specializes in making mulch. In his view, Dave found grinding operations to be capital and management intensive and not worth his efforts for the volume the company was doing.
Customers are continuing to look for ways to cut costs, Dave reported, so East Industries may be developing and adding pallet sizes and types.
Radio Frequency Identification (RFID) technology is going to be a key issue for pallet suppliers within the next several years, Dave predicted. He also envisions the future will bring a reduction of waste generated by wood pallets as manufacturers turn more to returnable pallets and packaging, including returnable plastic containers now being used for produce, collapsible boxes, and similar containers.
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