Bar Codes on Pallets Ring Up Business for N.Y. Recycler
Bar Codes for Pallets: Pallets-R-Us discovered a number of benefits when it incorporated bar code technology into its pallet recycling operations on Long Island, N.Y.
By Tim Cox
Date Posted: 2/1/1999
WYANDANCH, N.Y. ó Every day across America, retailers ringing up orders for shoppers slide the merchandise across a system that reads a bar code.
In supermarkets, home improvement warehouses, clothing stores, department stores, pharmacies and elsewhere, a scanner reads the bar code and rings up the price.
The bar codes do more than just record the price, of course, and the retailers use the additional information to good advantage. They devote considerable information technology resources to capturing information about sales and what merchandise is moving ó information that in part drives decisions for buying, receiving, warehousing, picking, and shipping additional merchandise to replenish the shelves.
At Pallets-R-Us Inc. and perhaps a handful of other companies, pallet recyclers are adopting the same kind of technology. They donít scan pallets at the check-out line, but the systems are helping them achieve greater efficiency and productivity.
The company, predominantly a recycler and located on Long Island about 30 miles from the New York City borough of Queens, is owned and operated by Nicholas M. Sorge, company president, and his son, Thomas J. Sorge, vice president. Pallets-R-Us has nearly 50 employees.
"Itís a big market here," said Tom. "There are a lot of real big industries in New Jersey" and others in New York City and Connecticut.
The company automated its recycling operations just a few years ago with equipment from Industrial Resources. The company is equipped with an Industrial Resources over-under conveyor and clipper lead board removers (two increased to four after the bar code system was up and running). There are six repair benches. Each board remover feeds a repair bench. The operation also features four pallet stackers and a plater.
As pallets are fed to the clippers, they are prepped ó damaged lead boards removed and remaining nails driven flush with the surface. The prepped pallets go on the top line of the conveyor to be pulled off at the repair benches and rebuilt. Finished pallets are placed on the bottom conveyor.
When the company first automated, however, there was relatively no increase in production. "We spent $200,000 and production was the same, more or less," said Tom. "We said, ĎIt doesnít make any sense.í "
Until then the company had different methods of marking pallets for tracking purposes: some men used paint and others used chalk.
They decided to try a system using push pins. They chose six colors, a different one for each repair worker. The worker would put his colored pin into the pallet when it was finished. "As the pallet came down the line, a guy would take the pin out and put them in a bucket. At the end of the day, Tom recalled, "weíd have all the high-paid management guys counting pins for two hours." Each manís production would be individually tallied and then inputted into a computer spread sheet in order to compile production reports.
In addition, the pins were fraught with their own set of problems. Sometimes they would fall out. Sometimes employees would put extra pins in the buckets. Some pins got smashed as the repairmen tapped them in place with a hammer. Down the line, sometimes other workers were unable to remove the pins. "It was a joke," Tom recalled, "but it helped us to a certain extent."
There was still an incontrovertible dilemma: once the pin was pulled out, if the pallet had not been repaired properly, "we didnít have any idea who was responsible." Management found that a significant number of pallets were not being properly rebuilt, but there was no way to track the pallets and hold the men accountable for their work.
Enter Alan Miceli, the resident computer guru at Pallets-R-Us. Alan has a degree in computer science and, according to Tom, is a certified "computer whiz."
"Alan said, ĎWhy canít we bar code pallets?í " The company summoned a few technology companies that knew nothing about the pallet business and asked about setting up a bar code system. "The prices were astronomical," Tom recalled. "They were totally out of their minds."
Alan asked for an opportunity to try to do it himself. He wrote the software, and Pallets-R-Us began implementing the use of bar codes in January 1997. The move cost the company about $10,000 in hardware, plus Alanís time.
Like the bar codes used by retailers, a bar code label attached to a pallet can hold a lot of information. "You can put a lot of information on that," Tom noted.
The bar codes have helped Pallets-R-Us automate the entire process of collecting the data it needs and provided additional benefits. It had a positive impact on employee morale, improved pallet grading, increased production, and enhanced customer relations.
The company also established a separate business entity, Innovative Data Systems, to market its trademarked Pallet Track software. It offers two modules: one employing a fixed scanning device (pallets are scanned automatically as they travel via conveyor past the scanner) and another utilizing hand-held scanners. (Pallets-R-Us uses both.)
The bar code labels are placed on the finished pallet by the repair worker. The labels have adhesive backing and come out of a label dispenser. They are fastened to the 6-inch foot of the stringer. Sometimes they are applied with staples. The label is coded for the individual repair worker and also for the grade of the finished pallet.
When the label is scanned, the scanning process records the type of pallet, who repaired it, and the grade of the pallet. Each manís daily production is tabulated automatically.
"If the pallet was not fixed properly, you know who did it...It tracks inventory at the same time," said Tom.
The data is collected and compiled. "Itís done automatically. At any time I can look at my production. As the pallets are scanned, it comes up." Alan designed the software to tally up production reports for each worker and to figure the companyís daily and weekly totals. The reports can show, for example, how many #1 pallets were completed by a certain worker or all workers in a given hour, shift, or week.
The software also indicates the time of each finished pallet ó the time its bar code was read. Although the time information is not something that is used on a daily basis, it has proven helpful for analyzing production. For example, the system allows them to record or capture how many pallets are done during a certain time interval ó the number of pallets each minute or the number of pallets over, say, 10 minutes.
The Pallets-R-Us managers used the feature to conduct a study to determine their peak production period. "You get your peaks and your valleys," Tom noted. "Guys speed up and slow down certain times of the day. We basically used the computer to figure out when our peak production was."
At the time, the company was considering adding another production line. The production study, aided by the "time stamps," uncovered some critical information: based on the timing, the new line would have developed a serious bottleneck. "We would have gotten higher production," he recalled, "but not as much as we were supposed to get."
"We just kind of stumbled across that," Tom added.
After getting the bar code system operational, Pallets-R-Us went to an arrangement of 12 repair benches; Alan is in the process of updating the software to add the additional repair stations.
Management staff are not the only ones pleased with the system. The repair workers, who are paid a piece rate, like it too, according to Tom. "They know that whatever they do" is recorded. "Itís accurate. Theyíre going to get credit for every single pallet."
"The guys are really happy, and Iím glad. If theyíre not happy, forget it."
The new tracking system also had a positive impact on grading. Workers earning piece rate, he noted, are mainly concerned with trying to produce as many pallets as they can during their shift. If a pallet has a defect, a worker can simply downgrade instead of spending more time to rebuild it to a higher, better grade. Workers at the end of the line, however, can see that the pallet should have been upgraded. "That gets kicked out," said Sorge, who noted the company can lose $1.50 on each pallet that has not been properly upgraded. "If he keeps doing it, he needs to be trained or fired."
The tracking system has put the focus of the grading back on the repair stations. "You want to be able to double-check them once in a while. Putting the (bar code) label on it, itís like theyíre signing off on them."
The result was a dramatic increase in upgrading, according to Sorge. "Even if itís only 200 pallets, thatís $300 a day."
Overall production increased for several reasons, he believes. Simply putting on the labels was faster than attaching and removing the push pins. Plus, the repair workers have confidence in the accuracy of the system. They know they are being paid correctly according to their production, and there are no longer any discrepancies about pallet counts. They have an incentive, therefore, to increase their production.
The bar codes also have been good for customer relations. When customers or prospects see the bar code labels, they invariably ask what they are and why theyíre used. They explain to the customers that the system helps to ensure quality control and to track production. "They look at it as though itís kind of high-tech," said Tom. Most customers, he noted, "think a palletís a pallet."
Bar coding offers a "huge advantage" in administering customer pallet repair programs, he said. When a customerís trailer load of pallets is unloaded and processed through the line, the bar codes enable Pallets-R-Us to generate a report on the contents. In the past, there was some guess work involved, Sorge admitted. "Now we donít guess anymore." The bar code system enables them to accurately tabulate what has been returned by the customer.
That kind of service gives them an advantage over competitors and has helped attract customers, he said. "Weíve gained a lot of business from that." Potential customers have been known to ask other recyclers what kind of system they use and how they can verify the contents of a trailer, he said.
The company also has used it as a management tool to analyze the services provided to some customers and the profitability of some accounts.
"Itís a big advantage for pallet guys to have it," said Tom.
(Editorís Note: Tom Sorge may be contacted at Pallets-R-Us at 516/643-1164.)
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