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The Future of the Pallet Industry: Asking the Right Questions in a Bobble Head World
Looking Ahead--Letter from Chaille

By Chaille Brindley
Date Posted: 6/2/2004

Smart companies stay on top of emerging trends, and a big part of being ready for the future is asking the right questions today. Sometimes things come and go based on the whim of the masses. Other times gradual changes cause gigantic shifts over decades.

            Focusing your business on the flavor of the month is a risky proposition. For every successful idea, like the bobble head or overnight parcel delivery, there are piles of things that don’t catch on or develop significant demand in the marketplace. The smart money follows shifts in how businesses and consumers operate. Outsourcing, consolidation of vendors, online purchasing, improved logistics tracking, business globalization, organic business, focus on total system cost, just-in-time inventory and lean manufacturing are all examples of major trends and shifts in business thinking.

            Some of these ideas will impact the forest products industry, including pallet and lumber companies. Some of these will not. If you bob along day-to-day putting out fires without thinking about the long-term, you may miss the future worrying about the present. Now that I have all the clichés out of the way, let’s focus on the questions you should be asking about your business.

1.) What are my customers not asking for but they really want anyway?

            Customers expect you to be mind readers. So if you are not asking how your product is used by your customer, you will not know what they really need. Knowing the needs of your customer could mean the difference between being a value-added provider or just another vendor selling on price. Look beyond your typical product to see if there are value-added services that you could provide or maybe you could provide with the assistance of other partners throughout the country.

2.) Who will I join forces with to service national customers?

            The good ole days of doing business with mainly local companies or local managers is starting to fade away for some markets. Increasingly, purchasing decisions are being made on a national or regional basis as corporations look to consolidate vendors and become more efficient. Even though the local manager may be your best friend, decisions are made higher up the corporate ladder. And pallets are just not important enough to make a power play over.

            Some larger corporations are looking for single source purchasing. Only a few large players and some brokers have been able to supply national accounts up until this point. But there are a number of groups in the works that want to fill the void. These alliances or partnerships hope to unite independent recyclers while leaving the entities as individual businesses. Will any of these catch on? Will any of these alliances work? Who knows! While everybody wants to be a part of the future, nobody seems willing to give up control in order to achieve it. If I were in the pallet business, I would be looking to see how I could join forces with others for the benefit of all.

3.) How can I make my operation more efficient?

            Lean manufacturing has led major multinational corporations to improve plant layout and reduce the number of steps or amount of human interaction needed to produce or distribute a product. The basic concept is that there are a lot of wasted steps in many manufacturing operations, and stopping to consider a more efficient way to work can save significant amounts of money over time. Consider having a lunch where you discuss your overall operations with your management staff. Give a bonus to the employee who comes up with the best idea to save money or time.

4.) What are the predictable surprises in your business?

            Every industry has them — the trends that you should have seen coming if you had stopped in advance to ever really look. The best way to figure out the surprises is to look to the past. What sort of things has significantly impacted your business over the past decade? Then look for similar trends in today’s business landscape.

5.) How will technology impact the future of the industry?

            The forest products industry is fairly low-tech, especially the pallet industry. However, increased automation has helped companies become more efficient with fewer personnel. Software and Web-based information or tracking may be one of the biggest technology improvements shaping the future of the pallet industry. This will be especially true as customers seek to make purchasing more electronic-based and less paper-based.

6.) How will global trade impact your business and the industry?

            From international standards to the growth of foreign markets as a source for timber, the pallet industry can no longer ignore the implications of the global economy. South America and Russia offer tremendous amount of untapped forests. International plant health standards are causing some packaging users to become confused. Some are even shipping on alternatives to wood just to avoid having any problems when a load gets to a foreign port. Changes in international product flow and the amounts of palletization overseas will impact the domestic pallet market. This could especially become true if many products that are currently floor loaded onto containers are palletized at the point of origin.

7.) How can the overall pool of white wood pallets be improved or changed to meet emerging customer issues?

            You are not doing business in a vacuum. If you are producing inferior quality pallets and trying to shove it out the door as if it meets customer specs, you are hurting more than just your reputation. The worse the white wood pallet pool gets, the harder it becomes to present recycled pallets to customers as a viable option to other alternatives. Developing a quality standard similar to the Europallet in Europe will only help the white wood industry take back some of the market share it has lost in the fast moving consumer goods market. Make the name GMA pallet really stand for something beyond what it does today.

            You can be like a bobble head and react to whatever forces act upon you. Or you can use your head and look for a way to be part of the future. The choice is up to you.


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