Collaboration is playing an increasingly important role in supply chain operations and LPR is playing a vital role in one of the most significant and pioneering projects the collaboration between Kimberly-Clark and Kellogg’s. Lucy Tesseras meets the woman behind it.
It’s a humble thing a pallet, and often the importance of having the right pallet in terms of efficiency, quality and environmental impact can be overlooked. But the much talked about collaborative arrangement between Kimberly-Clark and Kellogg’s, would not create the savings it does without the help of a distinctive red pallet.
LPR, or Le Pallete Rouge, had a long-standing relationship with TDG (now Norbert Dentressangle) in the UK, so when the 3PL set about turning these collaborative plans into a reality, it was LPR which provided the pallets.
The company’s red pallets are used exclusively on all deliveries for Kimberly-Clark and Kellogg’s, which not only simplifies pallet stock levels but also creates financial and environmental savings, because as part of the agreement Dentressangle brings back pallets in its empty trucks to LPR’s pallet sorting facilities in the north and south of the UK.
The operation, which began in 2006, proved to be a resounding success and has consistently created a seven per cent cut in transport costs, as well as taking truck miles off the roads, helping to lower fuel consumption and reduce carbon dioxide emissions. Above all else, it set the benchmark for the sometimes difficult task of collaboration.
LPR UK, whose clients also include Weetabix, Heinz and Nestlé, is in the process of looking at new collaborative opportunities with its main service partner, Norbert Dentressangle. The two companies hope to announce plans for more “clever logistics” ventures in the not too distant future.
The FMCG market, and in particular tissue and cereal products, currently account for around 50 per cent of the LPR business in the UK, but the company is keen to expand its repertoire by entering into the drinks sector.
Beverages has always been a big proportion of the business across mainland Europe, but in the UK it’s slightly different. Jane Gorick, UK general manager, says: “Establishing cross border flows is more difficult. Once you get a manufacturer in Europe the business drives itself it happens naturally. The UK is a little more self contained and self supported.”
LPR was founded in Toulouse, France in 1992 and expanded into the rest of Europe with the opening of subsidiaries in Benelux, Spain and Portugal. The company moved into the UK in 2003 and signed its first major volume deal with Kimberley-Clark in 2004, before extending into Ireland in 2006.
The company handles more than 42 million pallet movements across Europe each year, 50 per cent of which are within the beverages sector. Gorick reckons that in three years’ time drinks could potentially account for 30 per cent of the LPR business in the UK.
“We are throwing ourselves at this sector in a big way. To get the economies of scale that we want you have to be committed.”
When it comes to winning business Gorick says it’s about bringing something new to the table. “There’s no point in just offering the same thing people aren’t going to change for no reason. There needs to either be a commercial reason or an operational reason to change.”
LPR has 12 depots in the UK at present and if needed, and it makes operational sense, it will open more. “Because we are quite small we can be more nimble. We have the ability to tweak and flex the service to meet particular needs… There are 120 million pallet movements per year in the UK and we do 7.5 million of those.”
LPR UK is growing £2m £3m per year within its projection, and the team has grown from four people in 2003 to 25 today. In total there are 220 people working at LPR across eight countries.
While pallet pooling is well established in the UK, France, Benelux, Portugal, and Spain, it is less so the further east you go. Those markets tend to concentrate on white pallets which companies buy and ship out and generally expect to get the same amount in return.
“That concept worked fine when timber was cheap,” Gorick says, “but when prices went up companies realised there must be a more economical way to move goods on pallets.”
When timber prices went up, Gorick reckons the same pallet would end up costing around 20 per cent more. “It created an opportunity for the pooling business to step in.”
LPR entered the German market in 2008, ironically at the point when timber prices fell again temporarily, and has since opened an Italian office. “The market is in the mood for change,” she says. “We’re established there now, so as and when it takes off we’re ready.”
LPR prides itself on the quality of its pallets, so while an automated system could speed up the process at its sorting facilities, Gorick doesn’t think it’s the right move for LPR.
“I believe pallets should be handled by somebody so you can feel the structure. If you don’t touch it it’s harder to tell that there is a screw loose and it could cause problems down the line. It might look fine but physically handling it tells you a lot, so developing an automated system to refurbish pallets is not on my agenda. Quality is the most important thing. We could potentially process more pallets but it could end up compromising quality.”
1985 1986 Field service representative at CHEP.
1986 1988 Field service manager at CHEP with responsibility for a regional team of four people in the North West and account management interface with the Co-op Retail organisation in the UK.
1988 1990 National account manager at CHEP, responsible for Kellogg’s, Unilever, Nestlé with a combined turnover of £8m.
1990 1992 National audit manager at CHEP, which involved conducting profitability and efficacy reviews of transport and logistics, central customer administration and CHEP Fish-box Pool.
1992 -1993 Business development manager P&L at CHEP with responsibility for the “non pallet” equipment pool which included metal roll cages, mobile racking solutions, heavy duty boxes and a fledgling plastic crates pool.
1993 2001 General manager at DS Smith Logistics.
2001 2002 Business development director at Reliance Integrated Services.
2002-2003 Business development director at Aktrion.
2003 Gorick became managing director of LPR UK.