Casebook 2011: Polar Beverage chooses pallet provider
Creative partnership replaces multiple vendors with a single service provider.
Even after it made the switch to a pallet management service, Polar Beverages was so large that any single service provider was incapable of meeting its demand. The company eventually partnered with a provider that allowed it to exchange multiple pallet managers for a single, centralized service (IFCO Systems, 877-430-4326, http://www.ifco-us.com).
The company has grown tremendously during its 128-year history, now distributing 60 million cases annually from its two bottling plants and six distribution centers. For years, the company was forced to manage five separate pallet suppliers for just two of those locations.
Beginning in June 2008, the company entered into a new partnership with a different sort of pallet management provider. In just six months, Polar’s management felt ready to reduce the number of pallet suppliers to just two, and finally in October of 2009 began sourcing the vast majority of their pallets through one provider.
“In the past, the idea of a single pallet vendor doing more than 90% of our volume seemed ludicrous,” says Jim Doyle, vice president of operations for Polar Beverages. “We had resigned ourselves to managing a handful of vendors and dealing with all the issues that came with it.”
The collaborative supply partnership resulted in consistently high quality, lower costs, and minimal program management by Polar. Almost immediately, the partnership reduced costs by nearly eliminating program administration and minimizing downtime due to pallet failures. Because delivery modifications are made in less than 24 hours, the company now avoids pallet inventory buildup and shortages.
Management from the company and the provider meets regularly to brainstorm creative ways to drive costs out and add value to Polar’s supply chain. The two have developed models for vendor return programs, on-site operations, and pallet repair programs. This partnership and exchange of ideas is the basis for the continued success and growth of the relationship.
