PALLETABLE SOLUTIONS

CHRIS O'LEARY

Retailers are taking different paths to reach a common goal -- a high-quality, efficient pallet program.

Traditional wooden stringer pallet exchange programs have long been disparaged by retailers, who complain about the almost constant need for repairs and the hazards they pose to employees and products alike.

But retailers are finding and implementing new solutions to improve their pallet programs. For example:

Super Rite Corp., Harrisburg, Pa., now receives about one-third of its merchandise on pallets rented as part of a third-party pooling program. Using a third-party firm has simplified operations at the warehouse dock, smoothed out manufacturer-wholesaler relations, and slashed product damage and transportation costs.

Bi-Lo, Mauldin, S.C., has taken the costly but effective step of using plastic pallets to ship products from its warehouse to all of its 208 stores, which has eliminated pallet repair costs and vastly sped up warehouse operations.

Grand Union Co., Wayne, N.J., is using a "guaranteed buyback" program for a majority of its produce shipments. The strategy calls for using preferred wooden pallet manufacturers and recyclers, resulting in better quality and consistency.

Below are highlights of the enhanced pallet programs these retailers are using and how they are helping improve the quality and efficiency of pallet operations.

Super Rite: Pooling Resources

Third-party pallet pooling "is worth it just from the standpoint of our receivers not having to do battle with the drivers," said Wilbur Shirey, vice president of distribution at Super Rite.

Among the benefits the retailer-wholesaler has gained from accepting pallets supplied by a third party is the sharply reduced time spent by warehouse employees and drivers sorting through pallets and conferring about quality.

Super Rite's relationships with the roughly one-third of its manufacturers who ship on third-party pallets have improved because of this, he added.

"We're not arguing anymore over the quality of the pallet they're using or the pallet I'm returning to them," Shirey said. "They're not saying to me, 'That pallet's not as good as the one I sent you.' [Pallet pooling] takes all of that time out, which ultimately translates into money.

"In some cases there has been a reduction in transportation costs, because the trucking companies don't have to bother with pallets any longer," he added. "That's a benefit to the manufacturer and in turn a benefit to us."

Traditional pallets that meet quality guidelines set by the Grocery Manufacturers of America, Washington, "really don't exist or are so prohibitively expensive that nobody could afford them," Shirey said.

"Everybody was cheating on quality, and that led to an increase in damaged goods and hidden damage. It generally added a lot of cost to the system."

Yet, pallet pooling is not without additional administrative expenses. "I have to return the pallets to their depot, which is a cost," Shirey said. "We also have to keep track of the number of pallets we receive."

Bi-Lo: Plastic Makes Perfect

Bi-Lo is achieving cost savings and improved warehouse efficiencies by converting its pallets to a more expensive but much more durable material: plastic.

All 208 Bi-Lo stores now receive all their products on plastic pallets, company officials said. The result is a more efficient and ergonomically sound warehouse.

"Everything shipped to our stores goes out on plastic," said Jim Martin, site manager of perishables. The only exceptions are wooden pallets meant to serve as part of an in-store display.

The purchase of plastic pallets, which cost $23 to $35 each, represented a substantial investment when Bi-Lo purchased 12,000 of them last year, Martin said. Wooden pallets had only cost up to $5 in the past.

What spurred Bi-Lo's decision to make the heavy initial investment, however, was the belief it would be paid back in slashing the costs of maintaining and replacing wooden pallets.

"It basically came down to reducing the cost of maintaining

that wood pallet through a very abusive system," Martin said.

The retailer typically leveraged six full trips out of a wooden pallet, including the need for several repairs, before it had to be junked. "With plastic, we're up to probably 60 to 80 cycles already, and we've yet to replace the first ones we purchased," he said. "We haven't destroyed a pallet yet."

Plastic pallets are also completely recyclable, Martin said. It all translates into "tremendous savings," he said. "Our payback time was about four and a half months. There is quite a healthy outlay [in the beginning], but it's all paid back. We've totally done away with the type of repairs we used to make."

For Bi-Lo, plastic pallets also mean improved warehouse operations. Because plastic pallets weigh half as much as traditional pallets, they result in much less strain for a selector to pick the pallet, which ultimately translates into reduced workman's compensation costs.

Store back rooms have been made more efficient from the use of plastic pallets as well, he added. For example, storage space has been increased, because 20 stacked plastic pallets occupy the same amount of space it took to store 10 wooden pallets.

Grand Union: Buying Into Buyback

Grand Union is casting its vote with traditional wooden pallets for its produce shipping, but is ensuring their quality through a guaranteed buyback system.

"It's helped us considerably with pallet consistency," said Victor Lomoriello, director of produce. "We call a specific vendor when we have a truckload of pallets and he picks them up and returns them" to be repaired.

Under the guaranteed buyback system, which Grand Union began using last year, the retailer's produce growers and shippers, mostly located on the West Coast, buy their pallets from a set list of preferred manufacturers.

Grand Union, for its part, uses a pallet recycling firm that agrees to buy back the wooden pallets, no matter what their condition, for a minimum of $3 per pallet. "The pallets could be dust and the firm would still buy them back," said one source familiar with the situation.

The system has improved the quality of Grand Union's produce pallets from the manufacturer end and eliminated the need to throw out damaged pallets at the warehouse.

Lomoriello said a great majority of the retailer's produce shippers and vendors are involved in the program, and use specified pallets that are guaranteed by the manufacturers to meet certain quality standards and have an average of 10 cycles before needing repairs.

"It also means less handling for us," Lomoriello said, because there is no longer the need to sort through pallets to determine which ones need to be junked. "What we don't have anymore is the throwaways in our system," he said.

The system "helps us ease the warehouse burden and we can get our trucks loaded off faster," Lomoriello added.