CHICAGO — A lot of effort, energy and resources goes into producing clean linen every day at laundries across the country. Keeping costs low and production high are always key goals, but how can laundry/linen operators be sure they’re meeting these goals? What’s the best way for them to know where they stand, and to use the information to improve operations? For those surveyed by American Laundry News, benchmarking is the clear answer.
“Leading firms in whatever industry you’re in benchmark, whether you’re in manufacturing, or service or transportation,” says David Chadsey, managing director at Laundry-Consulting.com. “If you want to be a leader in what you do and you want your company to thrive, you’re a company that benchmarks.”
Glen Phillips, owner of international consulting and engineering firm Phillips & Associates, agrees that managers who want to be “at the best of their game” will need to have a firm understanding of the activity and production in their plants.
“They will hardly ever be able to reach their goals if they don’t benchmark somehow,” he says.
Though there may be some geographical or climate differences, many laundry operations in the U.S. are run in much the same way and are therefore in a perfect position to compare themselves to other similar businesses in the industry, according to Jim Doro, Textile Rental Services Association (TRSA) chairman, and president and owner of Doritex Corp. Doing so can help businesses stay competitive in a tough economic climate.
“Our industry is going through a price compression. We’re charging probably half today what we charged in 1972, and that’s not half with inflation—that’s half in raw dollars,” says Doro. “In order to keep up, we have to define best practices, and benchmarking is a good way to do that.”
AREAS TO CONSIDER
So what areas of operations should managers focus on?
All line items on a laundry’s chart of accounts are fair game for benchmarking, Phillips says, adding that while labor and utilities will be the biggest items for most laundries, textile and fringe benefits costs, for example, are less-recognized areas that should not be overlooked.
Chadsey agrees that every line item is worth looking at in detail, from labor and utilities to equipment and insurance costs. Breaking down the functions within an operation will help managers identify where resources are being used. Those areas that represent the biggest pieces of the operational pie will be areas where operators can look to tighten costs.
“If something’s only 1% of our operating costs, it’s not going to be a significant savings opportunity,” Chadsey says. “If labor is 30% of our operating cost, there’s a lot of opportunity there.”
Managers need to keep in mind, too, that it’s not a “one-and-done” process. Benchmarking is a committed, ongoing activity that tracks an operation’s costs and performance over a length of time.
“It is extremely important for you to know what you need to process in your plant on an hourly basis, a daily basis and a monthly basis,” says Phillips.
“The more recent that track is, the easier it is to make adjustments,” Chadsey comments. “If we’re talking on June 3 about what happened on June 2, we can be a little more responsive.”
But Doro warns operators to remember that benchmarking should not focus only on the activities taking place within the walls of the laundry operation.
“I think as we get away from the plant, both in service and in sales, there’s opportunities for a better job in benchmarking,” he says. “One area that I think of often is route optimization or how much time is spent driving versus servicing the customer. There’s not a whole lot of data on that, and there’s not even universal agreement on what is the best way to optimize a route.”
Both Chadsey and Phillips advise managers to look beyond pounds processed to get a true picture of what’s going on in an operation.
“People talk about their cost per pound—what they process—and that’s really not good enough,” says Chadsey.
Phillips agrees, adding that the most important thing is “understanding the number of pieces that you’ve put through the plant each day.” This will help managers pinpoint differences in rates of pieces handled by individual employees.
A SHARED RESPONSIBILITY?
Managers have a lot on their plates already. Adding the effort to benchmark can seem overwhelming. So should the responsibility for benchmarking be extended to front-line workers as well?
For Phillips, it’s a resounding “no.”
“It should be the manager’s responsibility to know his operation well enough to know what every cost item is in his plant,” he says. “Front-line employees will never, ever, ever understand or care about the interpretation of those numbers.” But Phillips adds that managers seriously committed to sharing the task with front-line workers need to spend a significant amount of time explaining benchmarking and helping those workers understand its goals, protocols and interpretations.
Chadsey, on the other hand, sees a lot of potential for involving others in the operation, especially as it can increase competition within crews or teams. He gives the example of a laundry he visited where employees were recognized on a daily basis for their production milestones.
“They involved those line operators so they’re thinking about it, and it’s not just numbers that management’s crunching in the back room,” he says.
Check back Wednesday for the conclusion!
Have a question or comment? E-mail our editor Matt Poe at [email protected].