Why Hinton Lumber inspects every pallet

0:00James Eaves Typically customers aren't finding a pallet, they are finding a stack, or something of that nature with a specific issue. And these are the things that have been dramatically reduced by the implementation of the Zira system.

0:22Emily Clark Thank you for doing this, James. I think first I would start with just a general description of what you do at Hinton and what already set you guys apart a little bit right now. And then we'll dive into specifically the Zira side.

0:37James Eaves What I do for Hinton right now, I'm basically a project manager inside the whole scope of Hinton Lumber across the four facilities. That ranging from mechanical projects to tech projects. Setting us apart the industry right now, Hinton is primarily, I would say, a block pallet producer, which has a little bit more of a technical scope when it comes to the pallet building industry. And also, the way our procurement strategy is leveraged, getting products from all over the world, in terms of raw materials and just being able to leverage those markets when our customers need to meet it.

1:20Emily Clark I think that actually segues perfectly into my first question, which is, why does Hinton inspect every pallet?

1:28James Eaves The real answer is that a single truckload that is returned for a nonconformity, that single truckload is a return on investment of basically the Zira subscription, for Hinton Lumber in most cases. We deal heavily in the petrochemical industry. And so, when you have something as simple as what we would call a nail pop or a shiner or a proud nail, whatever you want to call it, when it's damaging that customer's product in a shipping container going to the UK or wherever else in the world, that's detrimental to that customer side. So we have to pay extra special attention when it comes to that.

2:11Emily Clark It doesn't even necessarily have to be an exposed or proud nail. It could be any sort of deformity to the customer's order or expectation. If that's not caught and it gets a couple towns away to a couple of states away. There's a big fee for that, not only on replacement or return, the labor, the untangling of the paperwork to understand what happened.

2:36James Eaves I think it's very, very easy to get caught up in, well, what do you mean that one pallet out of the entire load, we don't, as an industry, sometimes invest ourselves into what the customer's needs truly are and how that one unit affected, whether that be downtime in their product, whether that be a disruption in their supply chain or them letting down their end-use customer. Every single thing has to be taken seriously.

3:06Emily Clark So prior to Zira, how did inspection work on your line?

3:12James Eaves So inspection obviously began at the receiving point. Now here in Houston, Texas, we're receiving in cut stock. So we would bring it in, examine it there, spot checking, and everything at this phase minus the tail end of it is spot checking because the manpower that it would take to analyze these individual units, just not cost effective. And so you would bring it in, spot check the lumber, bring the lumber to the line. The operator would then look over the lumber that he's about to use, look over the material as it's being used. And look over the finished product as it's being completed. Now, can one person do all of those things simultaneously? No. And then the end of it would be bringing it out of inventory and staging it for a truckload, in which we rely heavily on our forklift operators to visually inspect those pallets that are about to be shipped.

4:10Emily Clark I think that brings up another really good point, the fact that a Zira AI camera is seeing every single pallet that goes through your line, or even the components like a mat, both the top and the bottom of a pallet. And it does not have the constraints of humanity. It doesn't have to take a break. It doesn't have to sleep. It doesn't have to eat. Let's look customer facing. So across the industry, and this isn't just for you guys, what are now our customers, your customers, asking for that they were not even a couple of years ago. I would say that where pallets are going are going into more automated facilities. So things like, you know, overhang or not fitting in automation is really important. Are you seeing that? Or what else are they asking for that's new?

4:59James Eaves The automated distribution centers coming into the United States is really centric focus on every pallet manufacturer's eyes right now. Now, the interesting part when you're talking about these automated distribution centers is these are companies that are based outside of the United States that are bringing in automated technology into the United States. And so, what you have there is, when we, when they're thinking about a pallet and when we're thinking about a pallet, these are two different things. So the United States primary used pallet, and I think everyone would agree, would be a standard 48x40 GMA stringer style pallet. The problem is that this pallet will not travel unidirectionally, both ways inside a distribution center system. And so there's your first deal. Nobody wants to buy a pallet. A pallet is the last thing that you're thinking of. And in this case, it truly was. And so when these automation centers typically during or close to the end of install, this is when it's popping into their head. And they're seeing that this need is prevalent. So the short-term solution is to purchase what we would call a system pallet. This is a very beefy, large pallet that is built to last much heavier than a GMA, heavier than a standard rental pool pallet made to take a beating. And this pallet will live inside the distribution center in perpetuity. And so the goods will be brought in, Palletized again on a system pallet, so pallet on a pallet. And then when they're called on, that pallet will be removed from the system. The system pallet will remain. And this is because all of these vendors that are delivering into the distribution centers are not on a unified pattern of pallet as they would be in, say, the UK. Moving away from distribution centers, high focus on environmental programs in the past two, three, four years. Having and participating as a vendor in these responsible forestry environmental programs is something that our customers are really paying attention to.

7:22Emily Clark To go back to your point as well about depalletizing, repalletizing, that's another labor constraint that I'm sure these distribution centers are finding. I like to tell people who aren't in this industry. You have no idea what that dozen eggs and what it took to get to your local grocery store. One of our secrets in our article about 10 secrets every pallet shop should know. We're kind of demystifying a topic that's coming about quickly to an industry that's historically been very traditional is that you are inspecting every pallet, not just a sample. Do you think that this is what ties it all together? Is that the end result is expecting, you know, really a level of perfection that's now being required by those of us who are farther upstream in the process.

8:08James Eaves 100%. It comes to terms of quality of the pallet, You know, we have a highly automated machinery that can tell you how many times a machine has faulted in the last 24 hours, which is fantastic information to have from a mechanical standpoint. And these often indicate pallets that might have jammed or might have a non-conformity issue. What this doesn't do for me is stop that unit from making its way to my shipping dock. I can't do anything with yesterday's information. Yesterday's information is too late. And so seeing that pallet be flagged and stopped and fixed or removed, or better yet, the problem on the production line that's causing that non-conformity fixed. So that it's not creating a trail of non-conforming pallets, that is the benefit of it. Typically customers aren't finding a pallet, they are finding a stack, or something of that nature with a specific issue. And these are the things that have been dramatically reduced by the implementation of the Zira system.

9:28Emily Clark And we've seen that with other customers, even across the country, who are using this. I'm thinking of someone in California who, you know, you see four pallets go by who are all missing a certain deck board. And that does lead you to stop before there's a larger pallet problem and rectify a solution so that you can have that better productivity.

9:49James Eaves We as an industry are finally moving to automation, we're trailing behind Europe, as it were. I'm not going to say it's an afterthought, but what occurs is when you go to automation, you do end up having a smaller staff inside your production facility. Well, what you've also removed is that many sets of eyes as well, monitoring that product as it goes by. So something had to fill that gap. And not only have we filled that gap, we've superseded what we've been able to do in the past.

10:22Emily Clark Inspecting every pallet is setting you guys apart. And so, when a customer asks about quality now, what are you telling them and showing them with how you are using Zira to give them a greater degree of confidence in the business relationship that you have?

10:40James Eaves I'm glad you phrased it in telling and showing because you can say all day long. I love to bring customers into the facility. And obviously, bringing them into our Houston facility is like bringing them on an episode of How It's Made. And I really, really enjoy it. The majority of the time, I don't even get to point out the cameras on the line, the majority of the time, they're like, what's that little box? Is that a phone? Or what is this? And I will get to the point where I get to do it. You can do it in your office. You can do it on a Teams meeting, but at your line and pulling up on your mobile device, watching that pallet and then watching it go by on your mobile device. And I will tell you, a lot of people will say, "Well, what if it faults? We don't want to show it that it's going to fault. I want it to. I want it to flag it and show and let it stop and let them remove it because that sends a much stronger message because there is no such thing as perfection. So that is what I have seen. That sets us apart. Showing them that we can go back and look historically and say that we are at, I'm looking at this line right here, and I am at a 99.7 average on a pallet passing ratio. And by the way, those were removed and fixed and put back into service. That's such a strong message.

12:09Emily Clark In any relationship and business relationships are no different, perfection is not attainable as much as we may want it to be. Showing how we overcome adversity is where trust is built in business. And so being able, like you said, to show your customers exactly how you are proactively anticipating failure and overcoming that is critical to your operation.

12:32James Eaves This is our Houston facility. It has been our gem for a long time. We do have visitors coming in and out. Everyone has their plant tour in their head of how they're going around. And I will tell you that the primary in all of those tours is the Zira system.

12:47Emily Clark Well, we certainly think that you guys are a gem, both as a company and as professionals and people. We appreciate your partnership and I appreciate your time. This is coming down the pipeline. And I think it's important for everyone to answer a question of not just no, but is it a right now or a not right now question? So I appreciate it.

13:08James Eaves Awesome. Thank you.