Asset-based vs. Brokered Pallet Providers: What To Know
There are two main types of pallet providers — asset-based pallet manufacturers and brokered pallet suppliers. We encourage savvy businesses to do their due diligence to understand what pallet providers can bring to their business. Here's what to keep in mind.
Commercial businesses across a variety of industries use pallets for storage and transportation of goods. These include retailers, grocers, manufacturers, distributors and more. Pallet management is a standard need for nearly any large business these days.
Recycling pallets has become a quick growth segment of the pallet industry over the last several years. Additionally, pallet users have preferred using recycled pallets to new pallets due to the cost savings and sustainability benefits. Reusing pallets and wood packaging materials minimizes waste generation and decreases the overall consumption of wood fiber.
What many procurement and operations managers may not know is that there are two main types of pallet providers — asset-based pallet manufacturers and brokered pallet suppliers. There are considerations to keep in mind when deciding which type of company to work with. Let’s break it down.
Asset-based Pallet Manufacturers
Quite simply, an asset-based pallet supplier owns all or most of the assets necessary to support a customer’s supply chain. This includes the warehouses, trucks, distribution centers, and, yes, the pallets. Essentially asset-based companies are one-stop shops for pallet management and logistics.
In most cases an asset-based company will provide end-to-end pallet solutions such as onsite and retail services, supply, retrieval, reverse logistics and more. This results in lower overall costs for customers because the supply chain is managed by one company with 100% total control over operations. (Experience an unforeseen spike in demand? An asset-based pallet supplier can pull pallet supply and resources from neighboring plants to support your needs, quickly.)
[The right supplier is based on your needs and how well the supplier's capabilities align. Get the full guide on how to select the right supplier here.]
Furthermore, expect transparent and high quality reporting. Sophisticated asset-based pallet suppliers have replaced paper trails with digital records. Everything related to a customer’s pallet supply chain, associated costs, and/or income is documented and managed by one company and not spread among many third-party providers with differing systems.
For instance, here at 48forty, we can account for every pallet sorted, graded, repaired, returned to service, sold, or removed from a customer’s supply chain. That’s in addition to tracking by date, time, trailer load, location, pallet spec and quantity—virtually any metric a customer wants. This data is available to customers on demand as standard reports or customers can work with us for an even deeper analysis. Overall, everything related to a customer’s pallet supply chain is documented, transparent and available.
With control over each step in the supply chain, asset-based pallet manufacturers have greater flexibility and the ability to offer more customized solutions to their customers. This translates into a personalized pallet management solution that fits the needs of your business and individual locations.
Brokered Pallet Suppliers
As you might expect, pallet brokers do not own all of the elements involved in managing your pallet supply chain. They are a middleman that works with a network of partners and must negotiate contracts with a number of suppliers, warehouses and distribution centers to help move pallets.
These relationships are managed in an effort to secure the supply chain at the lowest cost possible for a business. While reliance on these relationships might give the brokered pallet supplier more flexibility along the supply chain and seem to save the customer money, it ultimately means less control over costs, supply, and quality.
[Vetting potential pallet suppliers? Conduct site visits before you make the final decision. Here's what to look for.]
Because there are more parties involved with moving and retrieving your pallets, pallet brokers have less control when it comes to working with pallet affiliates and carriers. However, a quality pallet broker will know how to prevent issues and will work to pair your operations with good affiliates and carriers and maintain solid network relationships.
Effective Supply Chain Management
Both asset-based and brokered pallet suppliers work to manage their customers’ supply chain and logistics successfully. These providers work toward common goals such as increasing overall efficiency, mitigating risk, and meeting deadlines.
However, many businesses find the differences between asset-based and brokered pallet solutions become evident when completing due diligence to understand what a pallet provider can bring to their business. It’s important to understand what a pallet provider is promising your business versus what they can actually follow through on and deliver.
[There is no standardized, industry-approved nomenclature for pallets. Here's what to consider to make sure a supplier's pallet specs will work for you.]
We encourage savvy businesses to do their due diligence to understand what pallet providers can bring to their business and suggest touring pallet provider facilities to compare an asset-based operation with a brokered pallet supplier.
Whether an asset-based or brokered pallet supplier is best for your organization will largely depend on your business’s specific needs. In general, make sure you are working with a supplier that can get you pallets when and where you need them most. From there, evaluate your typical pallet needs and make sure you and your supplier are closely aligned.
Here at 48forty, we are proud to own and operate 39 plants in the United States and employ over 2,000 team members. To see how we can help improve your business’s pallet program, get in touch today.