PALLETS THAT BRING RETURNS

RUSSELL SHAW

The search for a more durable solution to the industry's long-standing pallet problem is yielding deliverable results.

For upstream distribution between manufacturers and retailers or wholesalers, third-party pallet pooling is gaining ground rapidly as an efficient and successful method for keeping higher quality pallets flowing through the system.

For downstream, or closed-loop, distribution, on the other hand, in which pallets are employed to ship products primarily within one company, growing numbers of retailers and wholesalers are preparing to make the switch to a new generation of pallets.

For many of them, the pallet of choice is turning out to be not wood but plastic.

While price clearly remains an issue, with the cost of plastic pallets considerably higher than most other

alternatives, the potential long-term benefits associated with them are prompting many chains to take the investment plunge. For example:

Pathmark Stores, Woodbridge, N.J., is now in the midst of switching over to plastic pallets for all its closed-loop distribution needs. The retailer is replacing thousands of older wooden pallets with plastic, despite the considerable expense involved, said Don Firth, president of Blair Distributors, which handles distribution for all Pathmark stores.

"There is an investment-vs.-payback issue with plastic pallets, but we feel that the payback will come quickly from savings on pallet repairs. The plastic pallets weigh about 20 pounds, compared with 60 pounds for wooden pallets; they create less damage to store floors, and they are more stackable on trailers," Firth said.

Price Chopper Supermarkets, Schenectady, N.Y., has been testing plastic pallets for the past several months and may soon expand the program substantially.

"The results thus far have been very encouraging," said Ron Cellupica, director of warehousing. "The number of trips we are getting out of our plastic pallet more than justifies the added cost. We are eliminating practically all of the repair costs associated with wooden pallets."

Stop & Shop Supermarkets, North Quincy, Mass., has bought more than 45,000 plastic pallets in the past two years for use between its distribution center and its stores. The chain accepts four-way wooden pallets for shipment from vendors, mainly from third-party pallet pools, and praises the ability of the four-way pallets to accept greater loads.

But for downstream distribution, the company is committed to plastic pallets for several reasons, said Bavel Cummings, area manager of warehousing for the chain. "We started looking at workmen's compensation costs and the injuries that came with handling the older wooden pallets, from loose boards and splinters. We tried variations, like some plywood pallets with plastic screw-in bottoms, but we couldn't make them nestable," Cummings said.

Spartan Stores, a wholesaler based in Grand Rapids, Mich., is also using plastic pallets in its warehouse-to-retailer loop.

"We're a company that has made a firm commitment to use plastic pallets," said George Williams, vice president of warehousing. "We've had them in use over a year now in our grocery delivery operation, and we are getting ready to work them into perishables."

The vast majority of pallets in use in the industry today, even within the downstream closed-loop system, remain the traditional wooden stringer versions as part of the exchange system.

Moreover, even those retailers and wholesalers ready to invest in an improved pallet system may not be ready to take the full financial plunge into plastic.

Other closed-loop options retailers are turning to include enhanced-quality, four-way wooden pallets, which can offer considerable advantages over traditional stringer pallets but involve less up-front investment costs than converting to plastic.

Rather than plunge into plastic pallet technology, for example, Minyard Food Stores, Coppell, Texas, is working with wooden, four-way entry pallets, said Joe Sealey, vice president of warehouse operations.

The advantages of four-way pallets include built-in flexibility that allows hand-jack access from both sides and up to 20% greater capacity than traditional stringer pallets, Sealey said.

Although the four-way pallets, on average, cost $15 to $20 -- two to three times more than stringer pallets -- they still represent less of an investment than plastic.

"We are pleased with and committed to the four-way. We are looking at [the possibility of switching to] plastic pallets for shipping to the stores. They would have an ergonomic advantage because it would cut down on the amount of stacking our people would have to do," Sealey said.

"But we're just toying with the idea of plastic pallets right now. We're thinking about them in the planning stage. They are costly. If and when the price comes down, it would make it easier to absorb," he added.

Other retailers and wholesalers contacted by SN were similarly of mixed minds regarding whether or not to make the considerable investment to switch to plastic. Most observers agree that the traditional wooden stringer pallet system is wasteful and needs to be replaced. But what to replace it with, and when to do it, are still major questions for many.

"We are checking into alternate pallets, but we're still in the 'baby stage' on this. We're not changing anything real quick," said an executive Bashas' Markets, Chandler, Ariz., who asked not to be named.

Schnuck Markets, St. Louis, is committed to upgrading its pallet system, but is not ready to set a specific date. Schnuck has tested plastic pallets but found problems with stackability, load-shifting, sanitation and durability.

"We are interested in them [plastic pallets]. We are planning to use them but are not currently doing so," said Jim Nardi, senior vice president of distribution and marketing.

During "Re-engineering Product Management," a seminar conducted last year by the Grocery Manufacturers of America, Nardi said that during testing plastic pallets had revealed some problems that needed to be addressed, such as product slippage.

But Nardi is no fan of traditional wooden stringer pallets, either. Damaged wood pallet costs soared by 40% in 1992 alone, and jumped another 19% in 1993. Something has to be done, and done quickly, he said.

"Over the years, we've found the majority of damage associated with wooden pallets have occurred at the store level," said Price Chopper's Cellupica. "Not all of our stores have electric jacks, for instance. Some of them have manual power jacks and that's where damage can occur."

"I would say we've had a payback of 10 months on our investment," Spartan's Williams said. "Our retail stores love [the plastics pallets]. They don't mar the floors and are better from a sanitation standpoint. We use the nestable, lightweight kind that weighs 18 pounds or less."

"A regular wooden pallet gets two or three turns. Then it either becomes completely damaged or you've got to repair it. From what I'm told, the life span of plastic pallets are" much longer, added Sealey of Minyard Food Stores.

At other chains, a change in pallet type may be a matter of in-the-trenches believers lobbying and convincing senior echelons to go into plastic or four-way.

"I wish we did [have plastic pallets]," said Jeff Thornton, warehouse dock supervisor at Red Food Stores, Chattanooga, Tenn. "I understand plastic is about the best thing going, but that decision will have to be made by upper management."