Pallet networks are extending their influence but as the market matures it is becoming vital for networks to set themselves apart and distinguish their business from that of competitors. Lucy Tesseras reports.
With cost and environmental savings at the top of most agendas it’s easy to understand why pallet networks have become increasingly popular, both from a user and an operator perspective.
“Collaboration is key,” says Adrian Russell, managing director of Pall-Ex. “The days of standalone regional hauliers are under extreme threat at the moment and I don’t think individual hauliers can afford to not have a network solution as part of their portfolio in addition to their own offering.”
It has been a difficult time for all over the past year, but none more so than for the transport and logistics sector, which saw a number of companies biting the dust in 2009 after facing extreme financial pressure.
“The future of regional hauliers needs to be protected,” continues Russell. “I’m a strong advocate of SMEs as there is a spirit of innovation and flexibility at that level which is key to the economy. They need to be able to maintain their individuality and identity but at the same time have access to the economy of scale associated with a network.”
Anand Assi, senior projects manager at Pall-Ex, adds that collaboration has enabled disparate haulier businesses to collude and work together as a sum of their parts.
“Pallet networks have driven this cultural shift over a number of years allowing each haulier who belongs to a network to offer a cost effective shared-user service for their customers across the nation. Pallet networks have played an integral role in evolving the supply chain and catalysed the growth and development of the members within them.”
Once seen as the poor relation to the seemingly more sophisticated and streamlined dedicated services, the networks have worked hard to shake off their stuffy image, and thanks to the development of IT systems and value added services are now able to offer a slick alternative.
“Pallet networks are no longer seen as a lesser service,” says Stuart Lloyd, sales and marketing director of Norbert Dentressangle Transport Services. “They are a different service that offer different qualities. Network services have definitely become more acceptable over the years, and as people look for more cost effective and cost variable services they are becoming increasingly compelling.”
As such, Norbert Dentressangle is set to launch a fully integrated pan-European pallet distribution network in the first quarter of the year, which Lloyd explains takes “complementary capabilities and joins them up as a new product”.
Red Europe came about following the takeover of Christian Salvesen, when the company acquired three domestic pallet network businesses in the UK, France and Spain.
With the launch of the new service, Lloyd says Norbert Dentressangle Transport Services is aiming to become a one-stop shop for its customers. “Red Europe is another tool in our box,” he adds. “Furthermore, our pallet network is different from others as it is fully owned. It’s not franchised or a members’ organisation, which makes us more stable. We believe this differentiates use from the rest of the market.”
As the market matures it has become vital for networks to set themselves apart and distinguish their business from that of competitors, particularly as Adrian Russell believes the market is nearing capacity.
“When Pall-Ex entered the market there were only three networks, there are now ten and I believe that is pretty much at saturation point. Two networks attempted to establish themselves in the market recently and failed, so it looks like there might be the maximum number at the moment – but I could be wrong.”
In a bid to add more to its service offering Pall-Ex launched Retail Plus+ at the end of 2009, which aims to save time throughout the distribution chain and reduce stockholding requirements in-store.
The initiative was born out of its relationship with retail chain The Body Shop and sees Pall-Ex first delivering bulk product into the Pall-Ex hub, before then distributing only the required quantities to each shop.
Pall-Ex has also dispensed with holding cages at stores, and instead puts only the optimum required stock directly into the stockroom, which saves storage space and employee time. “We tracked how much time front-of-store staff were having to spend at the back of the store and devised ways to eliminate or substantially reduce their time away from being customer facing,” says Russell.
Pall-Ex has also introduced a packaging waste collection and recycling service called Eco-Drive, which is currently being trialled by four members across the country.
“Organic diversification and thinking unconventionally is key,” advises Russell. “You must be able to add value for greater market potential.”
Possessing cutting edge IT systems and trailblazing new technology is another way to stand out from the crowd, believes Graeme Wilson, commercial director of UK Pallets.
“Pallet networks are constantly evolving their services via innovating, development and implementing robust and user-friendly IT systems to match those of dedicated service providers.
“One of UK Pallets’ most significant achievements in 2009 was to create a web-based, integrated, in-house IT system that seamlessly blends together all aspects of the operation. The complete end-to-end system manages freight from the point of collection to the point of delivery, taking in all stages of the logistics process, and allows customers to track and trace their pallets throughout the delivery cycle.”
Phil Storer, UK&I director and European vice president at IPP Logipal, believes pallet networks are working more closely and have become much smarter in driving efficiencies through operations.
“As businesses continue to focus on improvements to the distribution process, collaboration, and flexibility to create partnerships that encompass sharing transport, depot implants and integration with retailers, are initiatives coming to the fore.” These, he says, are ideas that will help reduce a product’s carbon footprint, minimise transport mileage, eliminate waste and drive out cost.
Bird’s eye view
Michael Pooley, country general manager of pallet pooling operator CHEP, says thanks to the company’s “bird’s eye view” of the supply chain it is able to match customers up with a retailer en route or in the same area, to create a “leaner and more cost efficient logistical map”.
Jane Gorrick, managing director of LPR, agrees that it’s “important not to just look at silos”. The pallet pooler worked alongside Kimberly-Clark, Kellogg’s and TDG when the three companies formed one of the first collaborations among two rival grocery companies, after supplying both with pallets for a number of years.
The operation is saving 270,000 miles and more than 30,000 gallons of diesel a year, while the combined environmental benefit equates to annual savings of 380 tonnes of carbon dioxide.
Financial savings can also be made by moving traffic to a pallet network. Richard Faint of the Logistics Institute at Hull University Business School, says: “Networks offer the opportunity for companies to move from a fixed cost on the bottom line to a more variable cost, which will help in terms of budgeting for seasonal slumps and other variations.
“Customer service can also receive a major boost,” he adds. “Delivery times can be significantly shortened and through a pallet network it is possible to service every area every day, reaching every customer while not compromising on environmental or actual costs.”
Case Study: Packing in the deliveries:
Cliffe Industrial Packaging has outsourced 60 per cent of its distribution requirement to Palletline to meet its target of delivering to customers across the country within 24 hours.
Through member company Browns Distribution the packaging firm is now able to guarantee overnight deliveries.
Cliffe Industrial Packaging recently consolidated activities to a single manufacturing facility located adjacent to the distribution division on the Browns site and now has more than £1 million of finished goods at its warehouse.
As all production and distribution is handled from a single site, Browns Distribution is now able to offer container destuffing and pick and pack, in addition to nationwide delivery via Palletline.
“Fundamentally, achieving excellence in customer service is paramount for us as a business. Our philosophy is based around the concept that if it can be done, we’ll find a way to do it,” says Phil Dawber of Cliffe Industrial Packaging. “Our customers rely on our ability to get product delivered quickly and reliably.”
Palletline recently invested in a number of IT systems, including track and trace, digital signature capture and online POD access, to improve visibility and provide a better service.