When it comes to your relationship with your pallet supplier, teamwork makes the dreamwork. Simply put, pallet programs work best through partnerships. It is through trusted relationships that pallet systems thrive. Sometimes, programs billed as pallet “share and reuse” models are just talk if they do not back it up with a truly collaborative approach. This article digs deeper into why collaboration is essential and offers tips on how to get there.
First, a bit of history. At First Alliance Logistics Management (FALM), we are steeped in the power of partnering. Our partnership group was formed through an allegiance of visionary regional North American pallet companies back in 1995, a time when the highly competitive pallet industry was extremely fragmented with negligible national reach.
Our FALM founders came together to create a national pallet partnership network that could meet the emerging need for a national supply base. Additionally, over the years we have created some highly successful partnerships with other key industry players. The first was a cooperative effort with Penn Pallet and later Rehrig Pacific to serve Walmart. This was the Penn Alliance. Also, for the past 17 years, FALM has operated a joint venture with PLM, a Saint Louis area company called On Off Logistics. That partnership provides a dock sweep service to distribution centers, removing residuals such as unwanted pallets as well as baled cardboard and plastic as well as scrap metal.
Almost 30 years after our inception, we still work closely with our founders and a network of over 225 pallet suppliers across the country – sharing best practices and laser-focused on delivering solid, reliable value for our customers nationwide.
Why Collaboration Matters for Wood Pallet Supply
Teamwork has always played a role in the success or failure of pallet systems. One early collaboration example was that of local pallet companies partnering to service national multi-site accounts and facilitate pallet supply and retrieval systems as necessary, allowing those customers to enjoy enterprise-level pallet solutions. That practice began by at least the early 1980s but was ad hock and difficult to scale.
There are other examples of collaboration, especially in regard to pallet pooling or sharing. In the case of the GMA system, grocery industry cooperation led to the development of a national industry exchange program. Unfortunately, a lack of cooperative behavior also led to its downfall.
The GMA (Grocery Manufacturers of America) specification was launched in the 1960s, strongly influenced by the General Foods pallet. It was the basis of a national pallet exchange system that was used successfully by the consumer products industry. Oversight was transferred to the GPC (Grocery Pallet Council) in 1974. However, as has been widely told, the program lacked teeth.
Many pallet buyers wanted to pay less and were willing to take a slightly smaller pallet. The GMA spec gave way to the modified GMA spec, as quality continued to spiral downward. In use, pallet repair was generally inadequate to maintain overall pool quality and broken pallets increasingly became a topic of conversation for grocery industry leaders in the latter 1980s. This failure opened the door for the introduction and expansion of pallet rental.
Rental pallet programs are often billed as a paragon of collaboration. With responsibility for procurement and repair outsourced to the rental provider, have removed the burden from supply chain participants for buying and repairing pallets, and so quality is more consistent. Pallet “share and reuse” models can prove to be inefficient if participants do not embrace a collaborative approach, however.
Just as in the case of pallet users not repairing pallets or buying cheaper under-specification pallets in the original GMA system, however, self-serving interest can also derail the cost-effectiveness of pallet rental. When rental pallets are treated harshly in the supply chain, used for unauthorized applications, or not returned in a timely manner, such self-interested behavior results in higher costs and higher rental rates for everyone.
Likewise, if business is slow and the rental provider delays in retrieving empty pallets, that inconvenience and “free” storage is absorbed by the customer. And in the end, pallet rental is really a one-size-fits-all solution. In some cases, you are paying for more pallets than you need. In other cases, it might not be the best fit for your shipping needs.
How the Modern GMA Whitewood System Minimizes the Free Rider Problem
The self-serving behaviors discussed above are an example of the free rider problem, participants not paying their fair share of overall costs. The GMA system, as it has evolved today, helps minimize the free-rider problem that plagued the original GMA exchange system, and continues to hamper pallet rental programs. It achieves this end in that when a customer receives a pallet, it is typically purchased under load. The customer owns the asset and acts accordingly.
The pallet is legally theirs to use internally or for outbound shipment as required. If not needed, accumulated pallets can be sold to a local pallet recycler, with the price based on pallet condition. As such, the customer feels the financial impact of its pallet handling and management decisions and is motivated to act accordingly. Simply put, damaged pallets are worth less. Additionally, GMA pallets are typically widely available, so shippers are not vulnerable to a single rental pallet provider in the face of any availability concerns.
Today, a new generation of that collaborative spirit lives on through leading non-asset-based pallet management providers such as FALM. We provide reliable national service to supply chains through our broad network and logistical expertise. We meet regularly with our 225-company pallet supply chain as well as investor partners to share current market information, software and logistics opportunities, as well as other emerging technologies. Whatever your pallet needs, partnering with FALM and our network can help ensure that pallets are one less thing to worry about for your supply chain. Contact us today to find out how we can help.