Future strategy
February 1st 2008 The palletised distribution network,
one of the logistics industry's greatest
successes this decade, is maturing.
Neil Carpenter, Commercial and
Finance Director of PalletFORCE,
outlines the next stage of development
While still a relatively young
concept, palletised distribution
has proven to be a highly
successful market sector within the
transport and logistics industry, with the
major players enjoying exceptional growth
and profitability. PalletFORCE provides a
good example of what has been achieved.
Since our launch in 2001, the average
number of pallets processed per night has
risen from 500 to 7,000 and turnover and
profits have been up at least 15-20% yearon-
year, with net profits in the last financial
year of just under £2 million.
In essence, it's easy to see why pallet
networks work – done well, they provide
tangible benefits in terms of improving time
and cost efficiencies, to the benefit of
member hauliers and their customers alike.
On the other hand, there are a finite number
of pallets being moved around the UK at any
given point, so the time will come when the
market has matured. This hasn't happened
yet, though the sector is undoubtedly
maturing – but it means that networks must
look ahead if they are to maintain growth.
Flagship hub
The simplest step is to look at what is already
working and see if it can be improved. For
example, while PalletFORCE currently makes
the most of its premises, there is a limit to
what can be achieved with the existing four
aircraft hangars. For this reason, PalletFORCE
is investing in a brand new, custom designed
hub, which will be up and running by the
end of 2008. It has been developed to be a
flagship hub whose bespoke environment
delivers faster throughputs and higher quality
of operation. Designed to PalletFORCE's
specifications, the hub is squarer in design
than conventional institutionalised
warehouses to suit the specific mode of
operation, and with an express lane included
to further speed up turnaround. With a size
of 365,000ft2 – compared to our existing
premises capacity of 210,000ft2 – increased
capacity of up to 50% is anticipated.
Optimising the core business is one step;
in the longer-term, networks also need to
address the possibility of broadening the
range of services they offer, providing
members with the ability to pick from a
basket of options on an individual basis. Of
course, any new stream of business should
progress naturally from the core business,
in order to maintain continuity and avoid
disruption, but the possibilities are there.
One emerging trend is that we're seeing
an increasing number of part loads. A
typical contract might require daily
collection of smaller loads of 1-4 pallets
from the customer, which will be
transferred to the hub for the relevant
depot to deliver to the final recipient. With
larger loads, there is the opportunity to
harness the power of the network so that
member depots work together under an
organised structure to arrange delivery
without always needing to go via the hub.
Such arrangements require a commitment
between member depots to share
resources, communicate effectively and to
work together within a mechanism that
promotes and regulates service quality.
Similar ventures might be developed in
terms of utilising the storage potential of
member depots, or looking at different
types of transport service – for example,
home and office deliveries. Nothing is off
limits, provided it can be implemented in a
way that benefits the member depots. For
example, while network accounts have not
been pursued until now, there is no reason
in theory why they might not be adopted in
the future. All it takes is the development to
ensure that it is a natural extension of our
current activity and the member depots
gain as well as the central hub. PalletFORCE
isn't interested in quick wins; it's about the
long-term health of the network and
everybody within.
These are practical steps to fulfil our
responsibilities to our members but, at a
conceptual level, the members themselves
are the best resource a network can have.
PalletFORCE is "the network that is owned
by its members" and, because everybody
has a vested interest in the success of the
business, we feel that this fosters an
atmosphere of mutual respect and
partnership. There is definitely a 'club' ethos
at PalletFORCE, where we work together
utilising the expertise within the network
membership to find mutually advantageous
solutions rather than being at loggerheads.
Pride in service
To maintain the quality of the 'club,' we
make high demands of new members. Our
perspective is that quality overrides
quantity; there is little point in selecting a
business who delivers large pallet volumes
into the hub if they prove unable to deliver
on behalf of all of the other member
depots. We look for companies who take
pride in their service; in return, we feel that
this respect is reciprocated. New members
often state that PalletFORCE is chosen as a
Network by hauliers for these reasons.
In a changing market it is essential to
seek out opportunities to develop. Also key
is maintaining a high level of service –
essential to retaining members long-term.
Not only is membership of a stable,
efficient network a highly marketable tool
when retaining and winning business, but
proof of high standards in service and
delivery also allows hauliers to hold their
pricing levels in the competitive
environment of today's transport industry.
The future looks extremely healthy for the
sector, but only if network and membership
work together to make the most of new
opportunities. More articles from PalletFORCE plc: | 
