Developing a Refined Pallet
- 2018-05-23 12:01
- Pallet supply chain freight transport manufacturer, warehouse retailer
(PECO pallet company is the mainstream pallet manufacturing and operation company in the US market. The red tray is a prominent symbol in the US market. With the support of capital, the market share in North America is expanding constantly, and the standardization and technology content of operation are also very high. How to develop rapidly and expand in a pallet niche market? PECO pallet's experience is worth learning from China's scattered pallet manufacturing companies. This is an interview in 2015, the content of which is worth learning. In 1990, the PECO pallet company was a Pallet Exchange Company, established by 18 pallet manufacturers in the United States. This model is very similar to the current development model of the domestic logistics industry. At present, PECO has developed into a pallet company with 1600 manufacturing, repair, distribution and service outlets.
With the support of Pritzker group's private capital, PECO pallet has created a niche market for itself in the tray Market behind the supply chain. As a powerful player on this track, the PECO tray company uses powerful management, customer service and technical advantages to win customers like Kraft food and expand its market share.
A simple tray
The users of goods can hardly see the help of freight transport. Pallets are the unsung heroes of the distribution of consumer goods. This simple small plate, usually made of wood or plastic, is in the movement of the goods between many sites in the supply chain. The pallet shows its powerful effect, from the manufacturer to the warehouse, to the retailer and back back. In most cases, in the endless cycle of transportation and reception, the consumer has paid little attention to its existence, and only the packers, the boys of the yard, and the clerks of the store have paid attention to it. But the tray is far from insignificant. Without pallets, everything from dry goods to perishable foods such as milk, meat and dairy products can not be easily transported, stored or arranged on store shelves.
"I never thought anyone would be passionate about the tray, but I had to say that after three and a half years, I had a passion for pallets." Billionaire, investor and philanthropist J.B. Pritzker, his private fund, bought the PECO pallet company in March 2011, a small but promising North American wooden pallet supplier. He and his brother, Toni, are most famous in the investment world for their interest in technological start-ups, and of course they are also a strong supporter of medium - market companies like the PECO pallet company. The private fund of the Pritzker group, based in Chicago, has a lot of investment companies, including some rarely known industrial enterprises: plastic packaging manufacturer Technimark; Signicast, manufacturer of metal parts for motorcycles and machines, and MilestoneAV Technologies, a projection screen and other AV Preparation provider. Investment projects are not too sexy, but they are usually stable in the middle market. Therefore, it is no surprise that the company is attracted by quality products, high level customer service and potential of PECO tray company. PECO is gaining enough market share from its larger competitors, which is the CHEP of the pallet pallet, which controls the largest share of the market. Pritzker believes that the main obstacle to the growth of PECO pallets is the lack of funds to get bigger customers.
To win new business, pallet suppliers have to be willing to invest in a lot of cash, mainly to buy more pallets to cover a wider distribution network of product manufacturers. "Even if you win a small food manufacturer, you need a lot of money," Pritzker says. "The competitors' existing customers don't really like competitors, so tell them," why don't you do business with the PECO tray company? "Pritzker recalls. "We told our customers that this is a great opportunity and we can help your company grow." Thanks to the Pritzker group's strong funding support and long-term buying and holding, the PECO tray company has almost doubled its share in the North American pallet rental and distribution market, about 12%. The company's chief executive, David Lee, has increased its annual revenue by more than 25% over the past four years. The company has also opened up an important niche market in the field of food services.
The PECO pallet company employed nearly 200 workers in the North American network, and hired another 500 people through more than 50 outlets and a pallet refurbishment factory working with third parties. PECO, which relies on the expansion of large retailers, has expanded rapidly, such as following Costco's business, to move north to Canada and south to the south of Mexico.
CEO, the company's CEO, a 65 year old British born Lee, a former executive of GE capital, served as the helm of the PECO tray company in 2005, when the company was mainly a private label supplier to a member store to cooperate with a discount dealer. He is very good at the expansion operation of enterprises, after which he worked in rival CHEP pallet company. In 1990, Li helped to start CHEP's US business. CHEP is a listed company, Australia's supply chain logistics company Brambles group's company. "We spent a bit of time combing the industry's problems and actually improving the company's business by responding to the different values of the customer," PECO pallet's comments on American competition.
PECO was founded in 1990 and has obtained early investment funds from White MountainsInsurance Group, Walnut Group and MK Capital. Under Li's leadership, it obtains debt instruments from Golub capital, allowing enterprises to provide higher quality and service to brand customers from a low price discount model. After adding more leading manufacturers and distributors to its service network, the PECO tray company began to attract the attention of private equity, and finally appeared in the view of Pritzkers.
"The process is amazing and zigzag - but the end is the most perfect," Li joked, "looking back at the Pritzker Group due diligence, a temporary visit to a Costco center worker. J.B. Pritzker looked at me and said, 'you stay here, I want to talk to him. He went to talk to the worker for 10 or 15 minutes. He said, "this guy assured me that your tray is the best. In this way, the investment transaction has been completed. Both sides thought it was a good match. In addition to capital, Pritzkers has also provided substantial business, including national cooperation with food giant Kraft Foods. "(J.B. Pritzker) visited CEO of Kraft Foods and talked with him for a long time," Li said. "The contribution of J.B. Pritzker is to go in and say," Hey, we are standing behind PECO. We support this. " To be sure, Lee's passion for pallets is overwhelming. He has an encyclopedic knowledge of pallets - size, 48x40 inches; weight, 2800 pounds; the average shipments of pallets are 700 million times a year in North America, and pallets spend 30 days on average at the manufacturer's time; so, "all of this is your product on the tray," he said. You must pay attention to pallets, because pallets enable you to handle products effectively.
NOT SO SIMPLE is not so simple
Lee says PECO's business model seems simple to the outside world, but it is actually quite complicated. The company must navigate the logistics network of about 7000 nodes nationwide (warehouses, outlets, distribution centers, manufacturers, etc.) to ensure that their pallets arrive on time, constantly inspecting and refurbishing to ensure a good state. Pallets are kept in a safe cycle - they are transported by truck from one point to a manufacturer, who are loaded and transported to the retailer. once they are unloaded, they go back to the network. Before they are reissued, they are cleaned, inspected and repaired. The process, called Pooling, allows pallets to be used by multiple manufacturers. Li said: "everything is done in real time electronically - this is how we talk to our customers, how we talk to our suppliers, how we negotiate with the carriers and sign the contract," Li said, that the entry of private funds will bring great technical improvements, including the customer's online management of their pallet operation.
In the low profit retail store business, strict control of the supply chain has a great impact on the profit of the retailer, said Paul Weitzel, a managing partner of Willard Bishop, a retail consultancy. "The retailer stores goods from warehouse every day, and the manufacturer delivers it to the warehouse once a week." "this is a mobile business." With the quick turnover of inventory, you deliver more products. At this time, you need a reliable system to run as efficiently as possible. He said damaged or damaged pallets could lead to loss of goods, or worse, accidents that could result in personal injury in warehouses and shops. Maintaining high quality pallets is especially important for warehouse chains like Costco. Unlike most retailers, Costco's pallets are stacked on the same shelf for customers to buy goods. John Thelan, vice president of warehouse and transportation at Issaquah, Washington, says, "we have a security problem, so our tray quality is very important," Thelan directly supervises Costco. The 34 outlets warehouse has been working with PECO since its establishment. "This is a very close partnership. They (PECO) maintain a very close channel. They guarantee that the tray can return in time so that it can be rented again.
The endorsement of the market is a confidence endorsement for the company. PECO will continue to open up a new share in the North American consumer supply chain market. Lee expects the company to grow strongly in 2015. "We have a service that our customers want to buy, not just buy the next five years, but forever," Lee said. "Pritzker Group reminds me that they are long-term investment capital aimed at expanding their business."
Source: pallet cloud