Pallets under Scrutiny after
McNeil Recalls OTC Products
By Dan Alaimo
The pallet contamination that led to a massive recall of Tylenol and other McNeil over-the-counter (OTC) products last month is causing all participants in the supply chain to take a closer look at the composition of pallets, and how they are maintained.
The recall has spawned questions for OTC drug companies and the pallet industry, as well as concern among consumer packaged goods food manufacturers.
The Food and Drug Administration has questioned whether Johnson & Johnson acted quickly enough in recalling products. The problem was reportedly discovered in 2008, but the recall began in November 2009, was expanded in December 2009, and reached multiple product lines and international markets last month. McNeil Consumer Healthcare, Fort Washington, Pa.,
is a subsidiary of Johnson & Johnson, New Brunswick N.J.
In the pallet business, iGPS, Orlando, Fla., a plastic pallet pool company, has taken the opportunity to promote tests it says show that contaminants were found on many wood pallets, and is urging FDA to regulate them. Meanwhile, the wood pallet industry says that fire retardants in plastic pallets represent a danger if they break down and migrate to the products on the pallets.
“To be clear, CHEP pallets were not involved in the Tylenol recall in any way, but the incident has brought to light the critical importance of rigorous testing and quality control processes for shipping platforms and the materials used in them,” said Jim Ritchie, president of CHEP USA, Orlando, Fla., in a letter posted on the company’s Web site.
“Whether the pallet is wood, plastic, or some other material, all pallets may be exposed to various chemicals and debris as they move through the supply chain, and therefore should be inspected after each use,” he noted.
Prior to the recall, CHEP USA, which is by far the largest wood pallet pool company, launched a “Better Everyday” program last fall that aims to improve its service, quality and technology over the next five years, said Derek Hannum, director of marketing.
McNeil initially recalled Tylenol Arthritis Pain Caplet 100-count bottles “with the distinctive red EZ-Open Cap” from certain product lots on Nov. 6, 2009. The company said it had identified
an uncharacteristic smell or taste that led to consumers reporting nausea and related symptoms. On Dec. 18, 2009, McNeil expanded the recall to all available lots of the product. On Jan. 15, 2010, a far longer list of products – including Saint Joseph Aspirin, Rolaids and Motrin – was recalled, and international markets such as the Americas, United Arab Emirates and Fiji were added.
According to a statement from McNeil: “The company is initiating this recall following an investigation of consumer reports of an unusual moldy, musty, or mildew-like odor that, in a small number of cases, was associated with temporary and non-serious gastrointestinal events. These include nausea, stomach pain, vomiting, or diarrhea.”
McNeil said the smell was caused by the presence of trace amounts of a chemical called 2,4,6-tribromoanisole. “This can result from the breakdown of a chemical that is sometimes applied to wood that is used to build wood pallets that transport and store product packaging materials.”
The company said it is continuing its investigation, “and is taking further actions that include ceasing shipment of products produced using materials shipped on these wood pallets and requiring suppliers who ship materials to our plants to discontinue the use of these pallets. We will continue to closely monitor and evaluate the situation and consult with the FDA,” the company statement added.
Plastic pallets are an answer to the problem, according to Bob Moore, chief executive officer of iGPS, and a former top executive at CHEP. iGPS is the largest plastic pallet company in the world, and has been critical of the porosity of wood pallets.
“Organic wooden pallets are porous with lots of cracks and crevices, and maintain a lot of moisture. It’s a great place for bacteria to grow.” For a multi-million dollar brand, which a consumer packaged goods company has spent decades building, “an e-coli, listeria or salmonella outbreak can do severe damage to that brand,” Moore said.
Plastic pallets will grow “because we can take plastic where wood isn’t,” pointing to the pharmaceutical industry as an example. “Plastic is ideal for them because of the high value of the goods on the pallet.” The plastic pallets also have GPS units built into them, which facilitate tracking and tracing, also a concern for pharmaceuticals, he added.
Meanwhile, legislators are pushing for a ban on decobromine, a fire-retardant chemical that could leach and prove hazardous in a fire, noted Bruce Scholnick, president, National Wooden Pallet & Container Association, Alexandria, Va. This is present in many plastic pallets, as well as other products. “At some point in the not too distant future, iGPS is going to have to find an alternative – and far more expensive – flame retardant if they are going to maintain their fire rating,” he said.
Moore noted that independent laboratories have conducted “extensive testing” on iGPS pallets, and there has been no migration of decobromine. It is “absolutely safe.”
Hannum of CHEP, which has 85-90% of the pallet pool business, said, “We have evaluated practically every commercially available option out there. Our view is that none {of the alternatives} have proven to solve the complex equation of durability, strength and performance over time that pooling demands – and at a price point that the market is willing to accept.”
In his letter, Ritchie commented: “As the provider of the world’s largest pool of reusable shipping pallets, CHEP has an obligation to design and maintain strict and comprehensive quality control procedures for our platforms, which are classified as tertiary packaging. We believe our processes meet the most exacting standards for control and assurance, for everything from raw material to pallet repair and recycling, and we invite our customers to evaluate these processes for themselves.”
PECO Pallet, Yonkers, N.Y., follows CHEP in the wooden pallet pooling business, and Adrian Potgieter, vice president, sales, said PECO has had no problems with bacteria in wooden pallets. “Our focus is the food and CPG industry,” he said.
PECO is set apart from other pallet companies because of its standards for initial production, inspection and maintenance, he explained. “Our pallets don’t get reused without being inspected to a standard, and then they are maintained through a set of processes to our published standards before they are reissued and reused by a renter,” Potgieter said.
JANUARY 2010
New Technology Features Aim to Improve
Asset Management for Pallet Customers
By Rose Anthony
CHEP, the global leader in pallet and container pooling services, is offering new functionality in PORTFOLIO+PLUS, its innovative customer-facing online tool. The new features make it even easier for users to submit service requests, perform online corrections and reconciliation and generate reports.
The company also upgraded the application to allow customers to access Invoice Management, Order Submission and History, Transaction Listings and Bulk Upload functionality. These features enhance the user’s ability to control pallet movements though the supply chain and facilitate decision–making processes.
“We view the newest version as a game changer that creates a customer experience well ahead of the competition. When we designed the application, we were completely focused on our customers’ experience,” said Carey Sealy, Director of Information Systems responsible for CHEP’s customer facing technology.
“In a world of technology, it is easy to be complicated and cumbersome,” he said. “PORTFOLIO+PLUS makes interactions with CHEP simple by streamlining processes, simplifying transactions and providing access to near real-time information. Customers now have more control of their accounts and information to help drive supply chain decisions.”
This latest upgrade results directly from customer feedback. CHEP collaborated with existing users to determine opportunities for productivity improvements and cost savings measures. This ongoing collaboration is another example of CHEP’s Better Everyday program and is driving further enhancements and improvements for our customers.
The technology “has evolved into a more user friendly application that affords the customer the ability to effectively download reports to Excel and process corrections in a more automated and timely fashion,” said Jeffrey Jankowski, Regional Distribution Manager, Rich Products Corporation, a leading supplier to the foodservice, in-store bakery and retail marketplaces.
“With the most-recent enhancement, which Rich Products has been fortunate to participate in, CHEP’s on-line matching tool has revolutionized the manner in which customers can execute their weekly reconciliation efforts. More importantly, CHEP has continued to staff their network with a world-class level of associates, which truly makes our partnership successful.”
In October, CHEP announced the Better Everyday program, which was launched to coordinate all of the company’s customer-facing efforts including PORTFOLIO+PLUS. Better Everyday is a service excellence and quality experience program that reflects extensive consultation and successful trials with major customers.
Acosta Acquires TrueDemand Software
Acosta Sales and Marketing Company has acquired selected assets from TrueDemand Software, a leading provider of store-level insights and analytics solutions for CPG companies. TrueDemand, based in Los Gatos, Calif., provides software and services that help CPG companies lift sales while improving store operations, replenishment and supply chain business processes.
TrueDemand’s solution enables client teams to assess daily sales performance and to take action on specific recommendations. The company was founded in 2004 by experts in retail science and the consumer product supply chain.
Pepsi to Distribute Dr Pepper Brands
Pepsi has reached an agreement with Dr Pepper Snapple Group to make and distribute certain DPS products following completion of Pepsi’s acquisition of its two anchor bottlers: The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS). The agreement between Pepsi and DPS, which will replace existing agreements PBG and PAS have with DPS, will have an initial term of 20 years, with automatic 20 year renewals.
Under the new agreement, Pepsi will distribute: Dr Pepper, Crush and Schweppes brands in the United States; Dr Pepper, Crush, Schweppes, Vernors and Sussex brands in Canada; and Squirt and Canada Dry brands in Mexico. The agreement was anticipated after Pepsi and its bottlers earlier this year reached an agreement under which Pepsi would acquire the two anchor bottlers. Pepsi is on track to complete the acquisitions, subject to regulatory and stockholder approval.
