Executive Muscle Adds to P&G and Quaker Oats Pallet and Container Programs

Success story detailing how senior level involvement made the difference at P&G and Quaker Oats.
By Rick LeBlanc
Date Posted: 10/26/2006

Updated September, 2006

Too many projects and too little time is a common executive mantra these days, but it may be worth the time to take a second look at your company’s supply chain packaging initiatives. A very modest investment in top executive time and input can ensure the success of a company’s reusable packaging implementation.

If thoughtfully undertaken, executive involvement does not need to distract top managers from more strategic issues. In fact, an increasing number of executives are beginning to recognize that a new packaging program may be business-critical in its own right. Executive-level muscle provided the leadership, resources and input needed for Procter & Gamble and Quaker Oats to institute  successful pallet programs.

“My role was very much hands on,” recalled Paul Jobe, President of Jobe Logistics, a small consulting firm, and formerly Manager of Logistics for Quaker Oats Company in Canada. For many years he was the executive responsible for Quaker Oats’extremely successful CPC (Canadian Pallet Council) pallet program. The way their system worked under Jobe’s watch, the pallet administrator reported to the manager of transportation, who in turn reported to Jobe.

Executive level sponsorship can be critical in ensuring timely and successful implementation at every stage of the project’s life cycle.  Such support was crucial for Sam Cauffield when he rolled out Chep pallets at Procter & Gamble in the early 1990s.  “P&G was 100% clamp loaded, but customers wanted pal¬letized delivery,” recalled Cauf¬field, now retired, but who managed the conversion process at P&G as a staff specialist dealing with the manufacturing facilities.  “P&G was becoming more customer focused,” he reflected.

Top management support came from the senior VP level.  “They could run interference for us if there were any problems,” Cauffield recalled.  “The reality is that the worker bees do a lot of it, but they need support from top management. If they get it, things can happen. If they don’t, then things can plateau.” With the help from the top, his program turned into a success.

“Some plants embraced the change and others resisted it,” Cauffield said.  “It didn’t happen in six months.  It was a three-to-four year project.”

Getting to the basics, there are three essential roles in most reusable container and pallet projects. The first role is that of the actual material handling associates (the operators) who use the packaging system in the course of their duties, and make front line handling decisions. Secondly, there is the project manager function (the change agent) involved with making the business case, designing, testing and implementing the system, and managing its progress. Lastly, but certainly not least, someone is often required at the senior level (the executive sponsor) to approve expenditures and oversee the initiative.


Study Shows Executive Involvement Increases Success Rate

Research by Michael Greer, author of several books on the topic of project management, indicates that executive sponsorship may be one of the most critical factors in the success of a new project. Greer’s results are based on input from 50 companies from all over the world. Respondents reported on their perceived level of quality on several different dimensions including on-time performance, within budget performance, long-term value of the deliverables, etc. 

“My preliminary numbers indicate that 78% of the highest self-rated projects had adequate input and support from these (sponsor) groups, compared to 0% — that’s 0%! — of the lowest rated projects.”


Pallets Are Assets Too

For Quaker Oats, the principles of asset management were at the very heart of its CPC pallet program. According to Jobe, proper documentation is absolutely crucial; each pallet is an asset. It should be signed for, retrieved, and accounted for.

Jobe says that successful pallet and container control comes down to the basics. “If I take a case of Quaker Oats into a customer, I would expect to get a signature for that case, and I would expect them to pay for it,” Jobe explained.  “I would expect them to get a signature in the same way for a pallet. At that very basic level it works. Did I give it to you? Will you give it back? Will you sign for it?”

“The first thing I need to do is to make everyone understand that pallets are a resource that needs to be managed,” Jobe stated.  “This needs to be communicated both ways¬ — up and down. The executive group within Quaker Oats needed to understand that a lot of money and service issues are involved in pallets. And all of those at different levels throughout the organization have to understand the same.”


Why Bring in the Suits?         

Executive support in container and pallet program implementations is necessary for several reasons. While the opportunity for cost savings and increases in efficiency may be substantial, it may require significant capital outlay. Leasing options increasingly are available, but where disposable packaging was previously expensed, reusable packaging may involve a significant new financial investment. Winning the support of everyone in the supply chain can be difficult especially when a new program requires procedural changes.

The executive plays an important role at each step along the journey, starting at the planning stage, as well as through the stages of design, implementation, sustain, and renewal. The executive’s role typically evolves over the life cycle of a returnable packaging project. One way that top management plays a key role is in making their operations managers aware of new packaging concepts. By the nature of their position, many executives come in contact with new products before their operations people who are typically more focused on internal issues. One major U.S. building products company started a corporate reusable pallet program in the late 1990s as a result of the company president having attended a panel discussion on pallet pooling and reuse at a pallet industry conference.

Another reason for active executive involvement as a catalyst is that individual business unit leaders may not be driven to champion the program, especially if the benefits of the program accrue to the company as a whole rather than to the specific business unit. For example, shipping on half pallets may provide opportunities for better retail floor space utilization and decreased stocking labor, but could result in new challenges at the DC with respect to storage and handling.  If facility managers do not foresee a return on investment at the business unit level, they may be less inclined to help the project leader gather the needed background information to begin the project. For this reason, the support of corporate executives may be critical in gaining the cooperation needed to move forward on reusable pallet or container programs.

The selection of the project leader and project team are crucial. Executives must provide them the resources they will need to succeed. A successful project leader typically works well within the company’s chain of command but shows the ability to succeed in the face of organizational roadblocks or other ambiguities. He or she may be a staff person such as packaging engineer or special projects manager. A poor leader can present particular problems in winning the support of line managers and their employees who use the packaging.

When a staff person is in charge of a project, the communication of executive level support for the project becomes more important than ever. Support must “cascade down” from top executives through line management to material handlers. Failure to win over the middle tiers of management can result in an organizational “black hole” that gobbles up messages about the urgency of the program before it can reach the people using it.


Communication, Communication, Communication!

According to general studies on project management, failure usually lies not in the lack of executive support of projects, but the executive’s failure to adequately communicate that support. This is something that must take place at every stage of the implementation’s critical path.  In the design stage, the sponsor alerts line managers of the opportunities the project provides and the urgency of cooperation. If the project spans other business units beyond the sponsoring executive’s chain of command, he communicates the urgency to other executives and key managers to enlist their support. The message then cascades across to other key executives and down the chain of command.

The director of distribution responsible for one successful program attributed a good deal of the speedy implementation of his reusable pallet initiative to simply bringing up the topic ever so briefly when he made his rounds. He would ask a receiver how the program was going, enabling candid feedback, and explain the project’s importance. At periodic crew meetings he would take a minute to report on the initiative’s introduction and later its progress. Just a few brief cues delivered on a regular basis sent a strong signal that the reusable pallet program was extremely important to the company. The tactic worked.

As the program matures, the executive’s role becomes less active, and the program takes on a life of its own. Jobe’s experience at Quaker was that a lot of support was needed initially, but as time went on, the pallet administrators generated their own support and credibility. Monitoring results and intervening when necessary becomes a key management function. In the case of Quaker Oats, Jobe receives reports comparing his CPC pallet cost-per-trip against previous periods, as well as in comparison to pallet rental alternatives.

“Essentially,” Jobe said, “It is a very basic process. We go into a customer with a load of product, and $864 worth of pallets on the truck. If you don’t get those back, you’ve theoretically lost $864 on that truck. Depending upon how many pallets you have shipped over the course of the year, if you do not have control of them, you could lose a lot of money.”

While Quaker didn’t lose many pallets, Jobe is quick to emphasize that it is good practice for executives to periodically revisit and re-communicate the basics -  returnable pallets and containers are assets that must be managed.

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