World views of Dr. L. Allan Austin

CHEP vs. iGPS: Asset Management and Customer Service
November 11, 2010

CHEP is the largest pallet pooling company in the world, but they are not the only company to enter this growing industry.  iGPS presents the biggest competition for CHEP USA.  iGPS offers the only  48×40 pooled plastic pallet and under the leadership of Bob Moore is making significant competitive ground.  The key drivers for a successful pallet pooling model is asset management, operations management and customer service management.  From a consumer perspective, they do not care what pallet specification product is shipped as long as it meets market demand, safety and quality.  Pallet specification matters more to the pallet company.  Pallet management program is what the customer is concerned and is a point of contention.  There are three levels in an organization that interacts with a pooled pallet company; management who decides a pooled pallet would benefit operations and sales, the purchasing department who orders and manages pallet assets and the warehouse personnel that load and ship goods.  The pooled pallet user will order and manage the system and has a completely different perspective than management.  Some reasons a manager will choose a pooled pallet are environmental sustainability, price point, end-user requests and acceptable operational risk.  All pooled pallet companies must manage assets to meet financial sustainability.  Asset management is an area that shareholders, stakeholders and investors monitor as each turn an asset achieves equate to higher returns.

Humanity is acquiring all the right technology for all the wrong reasons – R. Bunkminster Fuller

When my generation was young(er) movies like War Games intrigued us and the first home computers were available to all.  I remember my brother writing simple computer programs on our Commodore 64 thinking we were masters of the universe as we put in those floppy disks into the disk drives.  It must be how CHEP and iGPS feel now as they seem to be in a contest on which can develop the most complicated tracking systems.

In recent news iGPS will apply Spider Asset Tags on a selected number of their plastic pallets.  The premise is they will be able to track assets through electronic monitoring in the field.  CHEP is ahead of the curve on asset tracking technology, but has not employed the option in the field.  The 3-in-1 tags offered by CHEP allows for three ways of identifying and tracking pallets.  The tag allows for RFID capability, bar code capability and human reading.  Since the conversion to RFID can be expensive and most modern warehouses already use bar code readers the 3-in-1 tag offers a cost effective way to monitor pallets.  Both choices are a serious use of technology in an attempt answer the asset management issue facing the pooled pallet industry.  While it appears the pooled pallet industry is acquiring the right technology, it my opinion they are using it for all the wrong reasons.  Implementation of technology is the key to asset management for the industry.

The CHEP solution –

Brambles and CHEP USA has always had an environment of continuous improvement and has presented product development projects that have driven an industry.  Given their greatness it is surprising that product offering like the 3-in-1 tag has not been presented as a solution to their customer’s pallet management woes.  The CHEP Track and Trace program consists of the following:

  • Real-time information on pallet movement and locations. (As they leave and arrive and scanned)
  • Sends out alerts when potential issues arise within supply chain.
  • Generates reports
  • The 3-in-1 tag provides a cost effective solution that uses RFID and Bar Code technology.

The Track and Trace software provides an asset location report that will outline the customer’s supply chain.  The tag can be scanned throughout the facility, shipped and arrive at the end user.  A notification is sent to the Microsoft BizTalk Server 2006, which is then sent through SAP to the Microsoft SQL Server 2006 and finally back to the company to notify them where the pallet and the product is within their operations.  The CHEP 3-in-1 Tag provides full supply chain visibility.

What the tag does not do is find all of the lost assets.  The Track & Trace program will need to be implemented properly, both from the shipper and the end-user.  It is a good tool that could be part of the asset management solution, but education and implementation would have to go hand and hand.  The program was to be implemented in 2007 and is unclear if the program went the way of the Blue-Step Pallet, which was scrapped as the next evolution of the block pallet.

iGPS Alternative

iGPS recently release that they will use the Enfora Spider AT to monitor a small amount of pallets.  iGPS is testing how their pallet interacts within the supply chain.  According to the Enfora website the tag has the following features:

  • Up to three years or more of operations.
  • Fully integrated – no need for external antenna or power source.
  • Wireless connection reliability.
  • Superior GPS sensitivity& geofencing.
  • Simplified Over-The-Air configuration & provisioning

The tag is less than 168 grams with versions that work on a radio frequency between 850 – 1900 MHz.  Physical interface uses internal USB, laminated external power switch, flexible mounting and communicates through the Enfora Services Gateway2.0.  For more information on Enfora and the Spider AT asset tag visit their website at www.enfora.com.

The Spider AT is an excellent tool to track assets of significant value, but I am not sure how it would add to the financial sustainability of the iGPS plastic pallet.  While asset management is high on market concerns implementing an expensive solution may not be the answer.  From the consumer’s perspective, they may think that iGPS will revolutionize pallet management by decreasing customer responsibility.  In my opinion, the Spider AT should be used to create a map of how the iGPS plastic pallet flows throughout the supply chain.  With that information a plan can be developed to better manage the pool and obtain greater turns per unit.  This is not a solution to the customers management of the pooled pallet.

There something happening here…what it is ain’t exactly clear…

Buffalo Springfield was not singing about the pallet business but some of the lyrics this industry can relate.  The pallet industry is underestimated in terms of its significance to commerce, economic growth and investment opportunities.  It appears that the major pooled pallet players are more focused on internal controls rather than market needs.  Accusations of food contamination from both have resulted in regulatory, policy and consumer advocates to engage the pallet industry that could have long-term negative effects on the market and economy.

I believe existing technology used by both companies are sufficient enough to lessen customer management burden and lost equipment.  During my time at CHEP we were exposed to a sales philosophy and training by Miller Hieman, The Sales Performance Company, www.millerhieman.com.  I first I thought, great…more training to fill the day at a convention that seem to go on for days.  Although, Brambles spared no cost and accommodations were excellent.  The one lesson that remains with me today asks the question, “What motivates your customer”.  As we filled out our answers the majority seemed to show results that benefited us.  So I would put it to Mr. Gorman of Brambles and Mr. Moore of iGPs, what motivates your customers when it comes to asset management and customer service?

On the CHEP side, I have seen the rollout of Portfolio Plus.  The on-line pallet manage program designed to give the customers all the tools to manage your pool.  I ask, who is Portfolio Plus for?  In the reorganization of Brambles CHEP USA pulled 89 Customer Service and reassigned those positions to Orlando.  Marketing Directors at CHEP USA will tell you that customer surveys show a positive reaction to the move.  The thing about having local representation with mandatory visits is the ability of the representatives to be proactive.  I would ask, was pulling local reps for the BVA (Brambles Value Added) or the customer?

On iGPS side, the constant call for wood pallet safety regulation will result with regulations for all as the wood pallet industry will not go quietly into the gentle night without a fight.  A plastic pooled pallet model with a $50-$70 price point for manufacturing would require a minimum of 5-7 turns to Brambles 3.5 turns.  Mr. Moore needs to focus on asset management and how to get back the thousands of pallets sitting in the lots of pallet recyclers throughout the country.  If you need confirmation look out your window next time driving by one.  On decBDE the bill HR 4394 from Congresswoman Pingree, I would say enough tomfoolery (to use a term from the generation prior).  Some produce require temperature management from the field to the end-user.  It is the opinion of some that produce can become contaminated by decaBDE through the hydro-cooling process.  That is not the case and it is irresponsible to make that claim.

Brambles and a thought

Brambles started in 1875 by Walter Brambles as a butchering business whose slogan was “cut up and deliver”.  A couple of generations later Brambles entered the transport business and listed on the Australian stock exchange in 1956.  The pooled pallet concept was created after World War II by the Australian Government and was named Commonwealth Housing Equipment Pool (CHEP).  Brambles purchased CHEP in 1958 from the Australian Government.  A half a century later Brambles is the leading pallet pooling company and is a multi-billion dollar business.  The CHEP pool originated with 60,000 pallets abandoned by the U.S. Government and is now over 300 million pallets strong worldwide.  There are between 1.5 and 2 billion pallets in the United States and the competitive landscape for a safe and reliable pallet is fiercer than it has ever been.  My word to Brambles is…Basics.  It is time to “cut up and deliver” and look beyond the trees and get back to basics.

One Response to CHEP vs. iGPS: Asset Management and Customer Service

  • billy says:

    hi intrested in working as a member of your campany

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