20 WESTERN PALLET
Comparing Asset Based vs. Non-Asset Based Pallet Suppliers: Both Critical to Supply Chain Success
Let’s set aside the current international pallet shortage for a moment. It is fair to say that most of the time, pallet buyers have many options when it comes to selecting a provider in a highly competitive pallet market. However, a critical first step in their selection process is to become familiar with the fundamental differences between asset-based and non-asset-based suppliers. Those differences can be crucial to a supplier’s ability to address particular pallet needs.
In simple terms, the asset-based pallet supplier owns much or all of the assets necessary to service customers in its operating area or operating areas in the case of multi-site companies. The list of assets includes property, structures, and machinery as well as warehouses and transportation equipment. Alternatively, the non-asset-based provider, often referred to as a pallet broker, relies on relationships. It leverages its connections with asset-based companies across its network rather than bricks and mortar to serve the needs of pallet customers nationally or internationally.
Asset-based pallet suppliers
First, let’s look at the characteristics and benefits of asset-based pallet suppliers. As mentioned above, asset-based providers rely on their production plants and transportation fleets to service their customers. Therefore, they require significant investment in that asset base and carry the inventory needed to run the business. They also need a large workforce to produce and deliver products and services.
On the inbound side, they purchase lumber from mills that often have shorter terms such as COD and 10 days NET. On the outbound side, they are generally required to carry the cost of finished goods where customers often require NET 30 or longer.
For asset-based producers, their focus is typically on manufacturing. That is because manufacturing excellence is directly related to their profitability. An emphasis on minimizing production costs allows them to maintain profit levels in an environment where lumber
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