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Bar Code Tracking Helps Pallet Companies Do More Than Count
Not long many pallet companies did not even have a computer in the office; now, bar code tracking systems have begun to find their way in many pallet businesses.

By Alan A. Miceli
Date Posted: 4/1/2003

Not long ago most pallet companies did not even have a computer, let alone a bar code tracking system. Things have changed significantly in recent years. The personal computer is basically standard equipment in the office of today's pallet companies, and bar coding has begun to find its way into many pallet businesses.

Unfortunately, bar coding has remained somewhat of a mystery to most pallet plant and sawmill owners. You hear such statements as, ‘Chalk can accomplish the same effect,’ or ‘A simple to use system that does not even require a personal computer.’ My favorite one is: ‘You can just go buy a scanner and design the system yourself.’

To a certain extent, the above statements are true. If all you need to do is provide a count for each employee, then chalk, colored pins, Bingo Markers or paint are all you need. You can implement a basic system or possibly create your own if you have the knowledge. After all, bar coding is not rocket science. The principle of bar coding is simple: a laser differentiates the black bars from the white spaces and sends a decoded message to a computer or device that is smart enough to do something with it. The difference is always in the software.

When bar coding was first introduced in the late 1970s for supermarkets in the grocery industry, let’s assume that all the system did was provide a count. Again, you could simply provide some sort of mark to identify the item. The mark was the price tag. Before bar coding, the cashier would type the amount from the price tag into a cash register to tally an order. What was accomplished?

1. The cashier had the ability to know the price of the item without having to call someone or look it up. This saved a tremendous amount of time.

2. The customer was able to verify the price paid and enjoyed the convenience of moving through the checkout line more quickly then before.

Some critics believed that bar coding would slow things down in supermarkets. The customer would dislike the absence of a price tag, and the system may be more prone to errors.

Of course, the critics could not have been more wrong. In fact, when bar coding was finally introduced, the following advantages were immediately realized:

1. The cashier no longer had to search for a price tag that may have been affixed in a different area each time it was labeled.

2. Since the bar code was printed directly on the item, it was always in the same exact place, simplifying the search process.

3. The supermarket no longer had to contend with dishonest customers placing a different price tag on the product and trying to sneak it by at a less price.

4. There was no longer the chance of the cashier ‘ringing up’ the wrong price.

5. Price changes and items on sale no longer required a different price tag.

6. Checkout lines became shorter. In fact, even the customer could check out an order -- as they now do in some stores.

7. Inventory records were automatically adjusted, allowing re-ordering to be more efficient and enhancing just-in-time supply chain management.

8. Physical inventory became more streamlined and could be done less frequently. (Ever wonder how a store can stay open 24 hours, seven days a week, yet the shelves are always stocked?)

9. Accounting went from a nightmare to a daydream almost immediately.

10. Human error plummeted in all categories.

You can begin to see the picture. What if the bar code in the supermarket was not attached to a software system? Basically, it would be as if we had no bar coding. Bar codes would have to identify both the price and the product. Price changes would require re-labeling. Every advantage listed above would be lost. Think about it: it would be virtually impossible to achieve all of the benefits without the software package.

Why use bar code technology without all the benefits? It does not make sense. You may as well use chalk or paint. A properly designed bar code system for a pallet company should provide at least the same advantages that bar code systems have provided to the grocery industry. If it does not, the skeptics would be correct.

Why would someone need bar coding in a pallet plant or sawmill environment? The most common reason is to provide accountability of employees. In the pallet industry, this is especially true if you have an automated line for repairing used pallets and you want to keep your employees on piece rate. Another reason is the ability to know what is happening around your shop. A bar code system can enable you to tell how profitable you are, calculate the production yield of your equipment, avoid human error, track products received and shipped and work in progress. It also can streamline your accounting.

How much do you spend on components? What is the true cost of your pallets? Can you afford to reduce prices to a customer when you are out-bid by a competitor? Do you have customers that are unprofitable? Are your employees doing the right job? Are they costing you money by not properly upgrading a pallet? (Example: if they plug a pallet instead of plating it.)

All these questions and many more can be easily answered by utilizing a well-developed bar code based tracking system.

Bar codes are the method of data input. In automotive terms, it is the body of a car, the place where you enter. The tracking system is the brain that makes it happen. In automotive terms, it is the drive train of the car. What good is having a shiny new car if it can't take you anywhere?

Generally, the lines of an automated pallet repair system are set up so that all the repaired pallets travel down a conveyor to stackers or workers who stack them. In a piece rate environment, you need to know who did what. Bar coding in its most basic form enables you to obtain this information. Affix a bar code label to the pallet after it has been repaired, and send it down the conveyor to be scanned and counted by some type of system.

But bar coding should not be used as a simple counting mechanism. Remember, if you are going to invest in a system, you should get as many advantages from it as possible even if you do not plan to use all of them immediately.

A well-designed bar code based system should provide the following benefits:

1. Change the product's values without having to change the label.

2. Set or change piece rates without having to change the label.

3. Accountability of employees even after the pallet has left your facility. (Remember: your customer is the final quality control inspector; you want to be able to track any problems back to the person who was responsible.)

4. Adjust inventory automatically. (You may actually care about how much you have in inventory one day.)

5. Reduce accounting procedures by automatically calculating compensation, costs, inventory, etc.

6. Produce comprehensive reports that are available for a wide range of time periods. Once you begin analyzing the data, you will want to compare your findings with previous weeks, months and years to evaluate how well your business has progressed.

7. Expandability of the tracking system. Databases should be designed so that other systems can access them. You may use your automated line system to adjust broken inventory into repaired inventory and a wireless system to add broken inventory from customer purchases. In the future you may want to track off-site repairs. Can a vendor's system be upgraded to a Palm Pilot system?

8. Additional systems should be able to use fixed data about employees, products, customers and vendors without changing it or adding the data into another database.

9. Scanners should be designed to function in the environment of a pallet plant. Scanners may be purchased for $200, but if you have to replace it everyday, it becomes the most expensive scanner on the market.

10. Equipment should be warrantied. Does the vendor have a loaner policy in case your scanner goes down?

11. Can the system compensate for a faulty or broken scanner?

12. A system should be designed specifically for a pallet or sawmill shop. Adapting an off-the-shelf system will rarely meet the real needs of the pallet professional.

13. Will the vendor modify the program for you?

14. Can the system handle tracking for a pallet repair program? Will it determine the quantity of pallets repaired for each customer and the quantity of each grade? Does the system generate a report for these repairs to simplify accounting processes?

The most important question is: will it work for you? Have you seen the system in action anywhere? Are the vendor’s customers happy with it? Are they happy with the vendor?

Investing in a bar code system is only the beginning, and the sale is only the tip of the iceberg. Any vendor can sell you a bar code system, but not every one can stand behind it.

If you purchase a tracking system from an equipment vendor, ask what their relationship is with the software firm. Are they only distributors? Did they develop the system themselves? If so, how did they know how to meet the needs of a pallet professional? Did they copy someone else's ideas? Were they ever in the pallet business? How do they protect against employee theft? Can an employee simply scan his labels to get additional production?

You could hire Microsoft if you had enough money, but even Microsoft could not develop a system tailored to your needs if it does not know what they are. Do you know what your needs are? Chances are, if you are considering bar coding for the first time, you probably do not even realize exactly what you need. That is an advantage of hiring a software company with experience in the pallet and sawmill industry. It can get you going on the right track. If you need customization, chances are it will be minimal, and the additional cost will be negligible. You don’t want to invest in bar code equipment that will be laying in a box somewhere in a few years.

I once visited a rather large pallet company that had installed a bar code system on its automated repair line. They called me in as a consultant to analyze the system. I found an array of problems that most other industries would not have. The system had not been designed by a software company that specialized in the pallet industry, and it showed. The pallet company actually had to lock the scanners during employee breaks because workers would simply scan their labels over and over, and the system had no way to avoid or detect this cheating. It was a very simple problem, but it never would have occurred in a distribution environment. In addition, there was virtually no accountability for grade once the pallets were unloaded from the stackers. There was no inventory adjustment, and the system was not compatible with any other tracking software. In fact, the vendor that sold the system did not even have any other products developed for the pallet industry, so expanding it -- to a wireless device to track new pallets or calculate yield from a saw, for example -- was not an option.

Don't get caught with a fancy counter. Tracking systems should be able to integrate into everything you do at your business. Anything else just does not make sense.

Do not allow yourself to wake up one day in the driver's seat, only to find that your car will not move. Junking the car and buying another one does not add up. You may as well have started with a box of chalk until you could afford the entire car.

(Editor’s Note: Alan A. Miceli is president of Innovative Data Systems Inc., which has been developing custom tracking systems for the pallet industry for over six years. The company’s Pallet Track® is used by pallet businesses across the U.S. and Canada. Alan has spoken on the topic of tracking systems at National Wooden Pallet and Container Association meetings. For more information, contact Alan at (631) 244-0069 or e-mail at amiceli@pallettrack.com.)

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