Pallets and containers: The plastic pool alternative
October 06, 2010 - MMH Editorial
“Plastics.” If you’re of a certain age, you recognize that line as the one-word secret to business success given to Dustin Hoffman in “The Graduate.”
Who is iGPS? “We are the worlds first and only pallet rental service that provides manufacturers and receivers with all plastic pallets embedded with RFID tags,” says Lewis Taffer, chief marketing officer for the Florida-based pool operator.
Like PECO, iGPS is challenging CHEP’s dominant position in the pallet rental market. The company counts about 10 million 48- x 40-inch plastic pallets in its pool, compared to 65 million wooden pallets in the CHEP pool in North America and 5 million wooden pallets in the PECO pool.
Like the CHEP and PECO pallets, the iGPS pallet meets GMA and ISO standards for rackability. Like CHEP and PECO, the sweet spot is fast-moving consumer goods. And, in a pooling model, asset utilization – or turning the pallets – is key to the profitability of the pool provider as well as a way to keep costs low for the customer. If iGPS has a niche, it’s in the food and beverage side of the consumer packaged goods market.
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And, as Taffer explains it, the process of working with iGPS is similar to the process of working with CHEP and PECO. “A customer can place an order over the phone, but most place their orders over the Web,” he says. “They specify the quantity of pallets they need and the locations, and we take the responsibility to get them there.” That’s where the RFID tag comes in to play: iGPS reads the tag when the pallet leaves an iGPS location to initiate the rental period; a customer scans the RFID tag when the pallet leaves its location to end the rental period. The scan can also be used to mate the pallet with a shipment number in the customer’s system for tracking.
The most important similarity could be that iGPS has priced its service to be competitive with CHEP, at $4 to $6 per trip, depending on the volume of pallets being used, the length of the rental period, etc.
There are also key differences between the iGPS pallet and the wooden pallet pools.
First the obvious: It’s a plastic pallet. That means it can be washed down for sanitation reasons after a use, which could be important for food manufacturers. In addition, Taffer says the pallet is 27 pounds—lighter than a comparable wooden pallet, weighing in at an estimated 48 pounds.
The RFID tag means that the pallet could be used to track and trace a shipment through the supply chain if the iGPS customer and its customers both have RFID portals in their facilities. Although few end users are focused on using RFID to track cases and pallets in an open loop supply chain, which is common in fast-moving consumer goods, the potential is there.
The last difference is what happens to the pallets after they are used. While CHEP and PECO operate repair and logistics depots, or work with third parties that manage those facilities for them, iGPS has developed a concept it calls iDepot. In this model, the retailers or distribution centers that receive product on iGPS pallets get paid to collect, inspect, sort and clean the pallets, and to then load them onto an outbound iGPS trailer that delivers them to the next iGPS customer. Damaged pallets, meanwhile, are segregated and picked up for repair once enough have accumulated.
“The iDepot model saves us the cost of operating repair depots and becomes a profit center for the retailers and distributors that receive our pallets,” says Taffer.
Reader survey: From wood to plastic to pallet pools, our readers tell us what’s important in pallets.
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