Advanced manufacturing systems allow rapid changes of production processes by means of reconfigurability providing mass customisation of products with high productivity, quality and low costs. Reconfigurable Manufacturing Systems (RMS) employ conventional as well as special purpose CNC machines, robots and material handling systems. In customised automated assembly, a number of different workpieces need to be processed simultaneously at various workstations according to their process plans. Therefore, a material handling system is an important part of RMS, whose main task is to provide reliable, accurate and efficient transfer of materials according to the process scheduling, without bottlenecks and stoppages. In this research, a reconfigurable pallet system was developed to facilitate automated robotic assembly for a highly customised production environment. The aim is to design a material handling system for conveying, sorting and processing of parts, which are supplied by robots and part feeders in different configurations. The developed pallet system provides a low-cost solution and it includes four flexible conveyors and part handling devices. All the elements of the system were successfully integrated with an intelligent controller. A user-friendly human machine interface provides easy reconfigurability of the pallet system and interfacing with robots, processing stations and part feeding sub-systems. The main advantages of the developed material handling system are the ease of operation, its reconfigurability and low-cost. The system demonstrates the advantages of reconfigurable material handling systems and it can be employed for training purposes.