In 1980, cosmetics producer Revlon installed an automated storage and retrieval system (AS/RS), automatic guided vehicles, and pallet conveyors in its Phoenix manufacturing facility. The systems were designed to eliminate three satellite warehouses, improve handling and productivity, and increase inventory accuracy. However, there was one glaring problem.

"The state of the art automated systems were constantly interrupted by poor quality pallets," recalls Michael Shamrell, Revlon's director of receiving and stores. "We needed consistently good pallets to make the automation work."

Shamrell says that many of the pallets being transferred into and out of the AS/RS had missing boards or inconsistent thickness of wood on end and bottom decks. This often caused the products on the pallets to tip or spill. Not only was this messy to clean up in a hard-to-reach AS/RS location, but it also caused constant stoppages that greatly decreased system throughput.

"We were constantly stopping the system because of poor pallets," he says.

Shamrell first considered purchasing slave pallets for use in the equipment. Buying slave pallets would dramatically increase his costs, however. It also would have required extensive handling as the products would have to be transferred on and off of the slave pallets. Another thought was to ship products on the slave pallets, but this also increased costs. Shamrell realized that there had to be a better way to manage the quality of the pallets available to Revlon.

He next looked to third party leasing services, but was unable to find a company that offered the consistent quality necessary to meet Revlon's requirements. Finding no suitable alternative, Shamrell began his own pallet management program on site.

It was a wise decision that has reaped many benefits. The quality and consistency of the pallets has increased dramatically. The system is cost effective, as repairing pallets is much more economical than buying replacements. It also provides faster cycle times, since Revlon does not have to rely on deliveries of pallets from other sources. Additionally, the amount of inventory is better managed, infestation levels are controlled, transportation and handling costs have been reduced, workplace safety and cleanliness has been promoted, and productivity has increased.

Today, Revlon averages about 33,500 pallets within its self-managed Phoenix system. This includes pallets used in the automation equipment, the manufacturing facility, the distribution centers loops, and pallets within the yard. About 300-500 pallets are sorted and repaired each day within its pallet yard.

Two full-time people generally man the yard working an 8-hour shift. While Revlon does not use a third party to manage its pallet program, Shamrell did choose to hire a firm that supplies third-party labor. This provides stability and the specific skills required in the pallet yard.

"We needed people who could handle the constant lifting and difficult parts of the job as well as the heat," he says.

The pallet yard is located outside of the AS/RS receiving area. It includes a 4,000 lb diesel lift truck, a table saw, air guns, a sorting area, and spare slat and stringer storage.

Revlon buys over 40,000 used 48 x 40-inch pallets each year from local vendors to supplement pallets repaired on site. Workers sort incoming pallets for quality, separating those able to be re-used as is from those needing repairs. Some pallets are rejected and sent back to the suppliers.

Also received, inspected, and sorted are pallets that hold products used in the manufacturing processes, pallets returning from the distribution center loops, and units exchanged with carriers and vendors. Pallets that require the repair of more than four boards are placed on a dunnage pile, as are non-hardwood pallets, and odd sizes. Altogether, some 63,000 pallets pass through the yard annually with the average pallet repair costing less than $1.50.

Revlon charges its carriers the market rate for each pallet it ships and also sells off its dunnage, non-hardwood, and odd-sized pallets. When income is compared with expenses, the program actually turns a small profit.

Shamrell says that the pallet management program has also produced more carrier-friendly freight.

"It allows our customers to focus on the product, not the pallet that it moves on," he says. "It is good for the carrier and the customer, and it also keeps our pallet suppliers on their toes."