Ensuring Inventory Accuracy is Stiffest Challenge Facing Today's Linen Managers (Part 2 of 3)

What aspects of inventorying and securing linen pose the biggest challenge for textile care managers like me? With proper controls in place, what percentages of losses (through shrinkage/theft and ragout) do you consider to be acceptable? How can an insufficient linen inventory impact the rest of my operation – labor, equipment, etc.?Member At LargeKen Tyler, RLLD, CFMKen managed the world’s largest laundry program for the Dept. of Veterans Affairs in 1977-2000, and the Department of the Navy laundry program in 1973-1977. He represents NAILM on the Clean Show Executive Committee and as liaison to JCAHO.
Textile management takes training in all aspects of an operation, including everyone from laundry employees to distribution to those who manage user applications like nursing and housekeeping.
In many operations, textile losses come close to operational labor cost in support of laundry and textile operations.
Textile inventory management is a team effort and must be time- specific. The process of counting must be controlled and done in writing. Training in how to conduct an inventory is essential.
Having sufficient textiles on hand to support customer service is critical. A laundry is not considered a warehousing facility, nor should it be. The need to have sufficient textiles on hand to support day-to-day operations (usually a 7-par average), taking into account any potential emergency, touches on both healthcare and hospitality. Only the textile items they store are different.
Lower par levels will have a negative impact on your customer service, decrease your life cycle for equipment and, as everyone knows, cause operational havoc.
While no loss of inventory should be deemed acceptable, a benchmark replacement cost will usually run between 8 and 12 cents per pound, with losses usually responsible for about half of that cost. Keep in mind that purchasing a quality product will usually save you time and money in the long run, and don’t forget that many foreign products have characteristics of high quality.
Knowing what you are purchasing takes education on the manager’s part.Equipment DistributionBob TumserBob, president and co-owner of Cincinnati Laundry Equipment, served 20 years as vice president and general manager for C&W Laundry Equipment, Cincinnati.
All effective linen management practices must begin with an accurate physical linen inventory. While it may seem obvious that knowing what you have is necessary if you plan to manage it, many organizations simply do not fully consider the implications of poor execution during this vital step in the process.
Conducting a physical linen inventory is an important method of identifying linen loss and forecasting linen purchases. It will also assist you in locating dead linen stock, due to hoarding or overstocked areas.
A physical inventory serves these purposes:

  • Provides accelerated and more accurate planning.

  • Identifies high-loss areas.
  • Provides financial information such as purchase price, item injections, ragouts and cost center allocation.

A linen management practice can only succeed if the baseline inventory is measured accurately and is maintained and validated throughout its life by periodic physical inventories. Laundries with outstanding inventory performance excel in other areas such as customer service, delivery and productivity.
Inventory turnover links directly to plant configuration and operating practice. It is the most important measure of performance. It captures the effects of a wide range of decisions and practices.
An insufficient linen inventory will increase linen loss, labor and your hours of operation. Again, this is only one step in identifying linen problems. Once identified, you must then communicate your findings and begin educating your superior, your staff and your customers.Chemicals SupplierSteven TinkerSteven, the director of research and development for Gurtler Industries, South Holland, Ill., has more than 30 years of experience in laundry chemistry research, development and marketing. He serves on the TRSA Healthcare Committee and the UTSA Plant Operations Committee.
I’ll let the rest of the Panel address the individual challenges of inventorying and securing the textiles in a laundry operation. But one way to overcome these specific challenges is to utilize an auto-mated textile cost management program to help control linen usage. There are several such computer-based programs available on the market that can help today’s textile manager maintain control of overall linen costs.
In hospital textile management and laundry operations, the linen delivered to the customer or hospital should be considered as a “supply item” that must be inventoried, tracked and monitored by all that utilize this important supply. The staff members that handle the linen must be educated on how they impact the overall linen budget. And proper controls can reduce linen-related costs.
Some textile control programs to consider: establish a linen management team; develop in-service training of hospital staff; implement product standardization; utilize a linen tracking system and software program; create a linen/scrub loss prevention program; and develop a continuous diagnostic and feedback program. All of these considerations can help one manage the cost of their facility’s textile inventory.
Placing these controls and awareness programs in your operation should make a significant impact in reducing textile inventory requirements. However, if inventory is reduced too much in the spirit of cost control, all kinds of problems can arise that defeat the original objective.
Over the short term, if textile replacement purchases are decreased, the textile manager gets congratulated for a “job well done” by their management team. But if a textile management team is not in place to properly identify textile requirements, beware of a budget process that cuts your replacement budget next year by a similar percentage!
If the par level drops below a level that allows you to run your laundry operation efficiently, the costs saved in inventory can be consumed by these operational inefficiencies. For example, if inventory levels are so low that returned, soiled linen can’t keep the washers fully loaded for a full shift, then labor, water, energy and chemical costs will rise as factored versus pounds processed.
Another concern with too low of an inventory will be the tendency to attempt to make every piece that goes through the laundry ready for return to the user. That may mean one of two things, a push to increase washing standards to the level where no rejects are tolerated. This can translate to the need for excessively harsh wash conditions that may further decrease the life of the textiles. Or another response may be a lowering of standards to make sure that everything is pushed into the systems, regardless of appearance.
Insufficient, or low, inventory can mean faster turns and thus a speedier end to linen. In other words, if the textile’s life is 150 uses, at 4 par, the average item will last 600 days. At 3 par, the replacement requirement will come after 450 days. Your budget has to reflect this change in the usage of textiles as par levels decrease.
As far as textile ragout numbers are concerned, if you are running at 4 par, and the average item lasts 182 use-cycles (half a year), then you would have to completely replace your textiles every two years. That means that, on average, 50% of your textiles would be replaced annually, which works out to more than 4% per month. However, if you run the same operation at 8 par, the replacement requirement drops to 25% per year or 2% per month. This does not account for any loss due to misuse, shrinkage or theft.
The worst-case scenario is when inventory levels are so low that the laundry runs below capacity. That drives up costs per pound. Successful textile managers find the point at which their facility or customers do not hoard or waste textiles and at which the laundry runs at peak efficiency, putting all the cost factors at their best level.


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