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Millwood Pursues Unit Load Management and Vertical Integration Strategies
Millwood pushes unit load strategy to sell cost savings while saving operational costs itself through vertical integration of its various business units. It can become one of the truly unique pallet and packaging providers in the country through its wide variety of services and expertise.
By Chaille Brindley
Date Posted: 7/1/2012
Innovation is a key driving force behind the success of Millwood Inc., one of the largest private pallet and packaging companies in the country. Headquartered in Vienna, Ohio, Millwood operates 26 locations employing about 1,300 team members. Millwood is vertically integrated going from the log to finished wood packaging to materials handling systems and packaging logistics services.
Millwood‘s core sales approach is to focus on the message, “Reinventing Unit Load Technology.” This is more than just a tag line; it is a core competency for the company. Millwood has the staff and expertise to offer a wide variety of services with a focus on improving logistics and cutting costs out of the supply chain by maximizing all aspects of the unit load and materials handling technology. By unit load, Millwood is referring to the interaction between the pallet, boxes, packaging, stabilizers and materials handling systems. With a systems-based approach, they all work together to efficiently and safely transport loads around the country.
Where Systems-based Unit Load Design Is a Core Competency
The idea of Systems-Based Unit Load Design was pioneered by Dr. Mark White at Virginia Tech and was widely employed by Ralph Rupert when he led the Center for Unit Load Design. The core idea is that by analyzing the pallet, product packaging, stabilizers and strapping, and materials handling as a complete system you can identify ways to improve safety, reduce product damage and cut supply chain costs. In many instances, spending a little extra to strengthen the pallet will result in greater overall savings by reducing the amount spent on corrugate and other parts of the unit load.
Ron Ringness, executive vice president and partner for Millwood, said, “We can supply a customer with new and used pallets, lumber, corrugate, engineered films and packaging systems. We also service their equipment and provide engineering services. We have expertise in all of the components of the unit load.”
Ringness added, “Along with a diverse line of products and services, we have an experienced staff to service a wide variety of customers and industries across the country.”
That size and degree of expertise is a key differentiator for Millwood. Ringness said, “We are not a small operation in which one or two individuals wear 10 different hats. We have people who have spent their careers in the packaging and materials handling industry.”
Millwood employs a sizeable staff of packaging experts, engineers, logistics and materials handling specialists to go way beyond just designing a pallet.
A new central part of its strategy is using science and real world data to back up its assertions. Millwood plans to launch a new test lab later this summer that will be led by Ralph Rupert, the former director of the Center for Unit Load Design at Virginia Tech. Rupert, who joined Millwood last year as its manager of unit load technology, is a recognized expert on corrugated packaging and pallets who has conducted tests for a wide variety of clients.
Millwood will offer testing services based on ASTM test procedures to its own clients as well as other pallet companies. Rupert commented, “This is not just an internal lab. We already have a backlog of potential test programs for the outside world.”
The Millwood lab will be an ISTA certified facility. It will offer vibration, impact and compression testing for transport packaging. Rupert said, “We will be able to do full unit load, pallet and package testing to verify the solutions that we offer. We’ll put science behind the solution.”
Ringness said, “The lab will be installed in our innovation center which is home to our technical service personnel.” There, the Millwood team is in the process of re-engineering and rebuilding two automated sorting systems.
Having bought Liberty Industries in 2005, Millwood may be the only major pallet company in the country that can provide transport packaging products as well as automated materials handling and conveyor systems. Last year, for instance, Millwood purchased NPS, a distributor of engineered stretch and shrink wrap films. This expertise truly gives Millwood a unique perspective when it comes to handling the interaction between the pallet, packaging and materials handling systems.
Ringness said, “We believe the unit load concept is the future for our industry. As our customers reduce their purchasing staffs, they prefer a single source that can help them reduce their costs. We can be that single source for film, equipment, pallets and other industrial packaging products and equipment.”
Rupert added, “Purchasing agents regularly call for specialty items and for answers to special problems.” This includes everything from specialty pallets to unique conveying and materials handling solutions to stretch wrap and box solutions.
It is difficult for many customers to realize that cutting costs on the pallet can actually increase the total cost of the unit load by a sizeable margin. Pallets, however, are a relatively small cost of the total unit load when you consider the stretch film, stabilizers, corrugated boxes, individual product packaging, dividers and other parts of the total load.
Joe Pecchia, director of strategic account & technology development for Millwood, said, “By looking at the entire unit, we take it out of just a commodity purchase. We do use a science-based solution before we offer any alternatives to people. If we can move a board, or alter the configuration of the material or put a different material in there, we can save money.”
System-based unit load design may be the future. But that doesn’t mean that every buyer is on board yet. Ringness explained, “You have to go to the highest levels of a corporation, including the supply chain managers and C-level executives at Fortune 500 companies. They are looking to reduce their total cost. And they have the clout to drive that objective through all their plants.”
Millwood’s expertise and reputation allows it to get access to higher levels in corporate customers that are necessary to drive true unit load changes. The process starts with audits and analysis for new business to identify areas where efficiencies can be improved and costs can be cut.
Millwood applies this same approach internally. It is known as one of the largest independent depot operators for CHEP. It has its own white-wood manufacturing and recycling facilities.
Millwood owns a lumber brokerage company and operates a number of sawmills. “We own R&S Lumber Co., which supplies softwood lumber to our plants, plus the housing sector and other customers. Because we have our own brokerage firm, we deal directly with the sawmills,” said Chip Trebilcock, president and partner of Millwood. “We have scragg mills for processing hardwood cants. We even buy our own timber and manage our own timber crews. Being vertically integrated helps us with our unit load strategy because a lot of our customers will buy lumber for crating and blocking.”
Known for specialty packaging expertise, Millwood works with vendors, such as Mid Continent Nail, to supply specialized products. Millwood buys its bulk nails from Mid Continent and works with the U.S. nail manufacturer on sourcing specialty nails for customers.
Logistics and National Sales Focus
Seeing a bright future in logistics, Millwood is in the process of expanding its capabilities and bringing in new logistics talent. This includes backhauls of customer products, delivering film and other packaging products, and managing pools of proprietary packaging. Ringness said, “We are getting more into Third Party Logistics (3PL) in markets where we operate warehouse facilities. We can receive a customer’s product, break the load down into cartons or units, then repack it for distribution back through our customers’ networks. Logistics is not just trucking; it is also warehousing, order fulfillment and other 3PL services.”
A core part of this strategy is the information systems and database technology that Millwood has developed in its PalletView™ customer ordering and management system. This Web-based account management system gives the customer access to data on its orders or the status of closed loop proprietary pools. Lee Evans, senior account manager for Millwood’s national accounts, said, “All the customer has to do is issue credits. It doesn’t have to manage the asset flow, sort or repair packaging.”
Millwood already has a large national network of its own facilities and strategic partners to help manage the needs of any proprietary packaging program. It has worked with strategic partners to provide guidance and even machinery as needed. For example, a machine designed for one customer uses a brush and vacuum system to clean debris and glass from tearsheets and slipsheets. Ringness said, “We save hundreds of thousands if not millions of dollars for a major customer by cleaning and reusing this material that used to go to the landfill.”
Beyond the basic operations, Millwood’s national sales team, led by Keith Countryman, vice president for national accounts, is accustomed to dealing with major corporations and communicating with the top brass of large companies. This is where its unit load expertise comes into play.
“We will always be in the 48x40 market because so many of our customers use that size pallet. But as the market becomes more competitive every year, we are emphasizing it less,” said Evans. “With our sales force and expertise, we feel we are better positioned to go after specialized markets.”
As the quality and availability of cores deteriorates, Millwood is pursuing more remanufactured and combo pallet business. Ringness said, “From our vantage point, the pool of recycled pallets is very tired and a lot of the available pallets are of poor quality. Customers want change. If our industry can’t deliver the quality they are looking for, someone else will.”
Customers want better quality products, but they still must be cost competitive. Using remanufactured and combo pallets has helped Millwood supply customers despite the changing market dynamics.
Looking to the future, Millwood executives believe it is uniquely positioned in the marketplace. Ringness stated, “We have the strongest and deepest national account team in the pallet industry. Our pipeline is full of opportunity.”