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Ensuring Inventory Accuracy is Stiffest Challenge Facing Today's Linen Managers (Part 3 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.?Commercial LaunderingRichard WarrenRichard is general manager of Institutional Services Corp., a Conway, Ark., commercial laundry serving the healthcare industry. His experience also includes industrial laundering and linen supply.
Let’s look at this from a laundry perspective. There are no real problems counting the linen, but it is imperative that all private stashes are emptied. Shortages are the cause of those stashes in the first place, and hoarding creates shortages.
Linen security is the biggest problem. Most operations keep the clean-linen storage areas locked. But how many keys are in existence?
I had an ongoing experience where the soiled linen was being pilfered! I never caught the culprit in action, but he couldn’t keep it to himself. When word got out, the situation was corrected.
There is always the “Red Bag” syndrome where some well-meaning soul uses these bags, which, of course, end up in hazardous waste. That is a healthcare phenomenon and not common in other industries. What is common is the improper use of linen goods for cleaning, flood control, etc. The staff wants to destroy the evidence, so much of this category ends up in the trash bin.
Many facilities have surveillance cameras. Are they checked for people carrying out linen goods, or just computers and lamps? If there is questionable activity, is anything done about it? Are allowances made for very important customers, highly regarded staff members, or management types? Or are those confrontations avoided altogether? If facility management does nothing, there is no alternative to higher linen costs.
I know that all laundry customers receive clean items that don’t belong to them. When that sheet or scrub or widget of one description or another comes from several states away, how did it get there?
Commercial laundries don’t collect from every hospital in your state, but every hospital has linen in its facility that hails from somewhere their laundry service doesn’t visit. Even facilities that have on-premise laundries inexplicably get items that aren’t theirs.
Our company processes a lot of new, unopened linen. Occasionally there will be some items included that have another facility’s logo on them! Long-term care facilities are flooded with linen from local hospitals. I can understand how management types may not want to address this phenomenon, but I cannot understand why it is denied nearly all the time.
I talk about other facilities’ linen items because this is a universal problem in healthcare. When we see “foreign” linen in our facility, it is human nature to assume that our property has gone to their facility. This particular problem is not nearly as severe in hospitality facilities.
It cannot be overstated that all laundry facilities, off-site and on-premises, must tighten up and guarantee that linen goods are not walking out of the building. This is stealing and should be dealt with accordingly.
I won’t try to quantify appropriate amounts for replacement. I think that is better left to your administrators and your suppliers.
Private stashes take up room that could be better used for other things. A large facility may have as many as 20 “special” locations. If staff spends a half-hour each week maintaining each of them, it adds up to one-half FTE. But the disruption is the major expense of linen shortages. The goods are not there when needed, so the procedure is changed. When the goods are ready, the procedure is changed again, and that usually includes a great deal of duplication. The heartburn of making explanations, or listening to them, is considerable, frustrating and nonproductive.
Laundries can score quite a few political points if they will help with inventories. Most laundries process by the pound, so counting is a nuisance. But we can count under special circumstances, and inventories are the time for it. Linen managers will be appreciative and remember that assistance.Technical SupportDan LansfordA technical support specialist for the Textile Care Division of Ecolab Inc. in St. Paul, Minn., Dan provides technical support to the company’s service personnel and customers regarding specific applications of laundry products and wash processes.
In a perfect world, every fabric would have a black-box recorder with a GPS locator beacon. In the real world, inventory is best managed by weight, piece-counting or volume measurements.
Bar coding and radio frequency chips do offer value for keeping track of the higher-priced linen but their application has not yet made it to the room towels, robes and bed linen.
The first step is to isolate linen loss through physical factors such as damage and misrouting from that of human factors.
Linen theft should not be taken lightly or as “just a part of doing business.” Antitheft policies should be clearly defined and addressed up front with all new hires. A dual-person inspection system of linen inventory works to maintain an atmosphere of seriousness about linen control. Equal notification should be given to room guests by using such methods as room information cards, check-in agreements, exit inspections, etc.
A good working solution to employee attrition problems is to establish a discount program where employees can order and pay for linens through the same channels as the regular linen replacement orders. The program could be an annual or biennial activity.
Physical problems like burrs and snags on equipment surfaces can double the replacement costs in a short time. Conveyors, ironers and folding equipment should be kept in proper alignment to avoid linen snags and tears. Any time an L-shaped tear appears in the fabric, mechanical stress exists somewhere in the handling system.
Chemical programs require regular monitoring for proper product application. Fabric damage can appear two to eight weeks after a misuse of washing chemicals. Overall fabric tendering is a common sign of a chemical problem somewhere in the wash process.
Fabrics should be of a suitable quality to withstand the rigors of multiple uses and washing. A low-cost, low-quality fabric mixed with the general linen can lead to linting problems for all fabric with which it is washed. Make sure that the linen purchased is intended for reuse rather than a single use, as the price differences are substantial.
Reduced par levels force extra wear to the fabric to maintain usage demands. Indirect higher costs from labor and machine wear can more than justify the need for a higher par level.
Replacement cost ratios can vary from one laundry to another. There can be no exact number to apply to all laundry facilities given the variations in soil loading and fabric design. One can only say that the sudden increase in replacement cost is but one indicator of a laundry problem that can seriously affect future inventory control costs.Equipment ManufacturingRichard AlbersRichard is marketing director of laundry systems for Pellerin Milnor Corp. and has more than 30 years of experience in designing, selling and installing continuous washing systems for large commercial and institutional laundry operators.
A single turn of linen is usually defined as one day’s worth of linen usage. Thus, a small motel may very well get along on one turn. Its staff takes the soiled linen from the rooms early in the day, washes it immediately and returns it to the rooms later that same day before the next guests arrive. There’s no problem.
If the motel decided to send the linen to an outside laundry, however, it would probably need a second turn – even with one-day turnaround. The dirty sheets would need to be processed overnight (while the second turn was on the beds) and delivered the next morning.
A more likely scenario involves a single pickup/delivery each afternoon. This might even require three turns – one clean on the beds, one dirty to be picked up and a third clean on the delivery truck. Healthcare institutions may require four or five turns, even with an on-premises laundry – possibly more with an outside supplier.
Now let’s suppose you manage the OPL for a 500-bed hospital (at 18 pounds per occupied bed and 85% occupancy, the hospital uses about 2.8 million pounds of linen per year, or about 7,650 pounds/day). You run seven days per week but you’re getting tired of working on Sundays, so you want to suggest to your administration that it buy one more turn of linen to carry the hospital over on Sundays. At about $10 per pound to buy new linen on average, the hospital will have to invest about $76,500. Wow!
Heck, you’re struggling to get them to pop for that new $30,000 small-piece folder, so what can you do to justify a Sunday shutdown?
First, keep in mind that the linen inventory is actually a capital cost. It stays on the books as long as the hospital exists (even if you send your linen outside some day). It is always there.
But it is not the same as linen replacement cost. Those purchases are used to cover losses and to keep the linen inventory at a sufficient level, not to get it there in the first place.
Thus, you should strongly suggest that the $76,500 be amortized over a long time, perhaps 25 years. At 7.5%, the extra turn will only cost about $6,863 per year or 0.246 cents per pound processed. It looks smaller already!
Of course, you will have to store that new linen somewhere. At about two 3x5 carts (plus a third cart space for entry) – or about 45 square feet – for each thousand pounds of stored linen, you will need to find a room of about 345 square feet (like the one just down the hall being used for junk). However, since hospital space costs at least $150 per square foot, that new bean counter upstairs may just try to stick your budget with extra space cost.
At $150 per square foot to build, there is another $51,750 to consider. That’s $4,643 per year (0.167 cents/pound) written off at 7.5% and 25 years as well. (Consider yourself lucky. Your laundry is big enough already and doesn’t need more production space, too.)
And to make matters worse, if you cut back from 56 hours a week to 48, your average hourly production rate must increase from 956 pounds/hour to 1,116 pounds/hour. Now, you must have that new small-piece folder to keep up. There’s another $30,000! What’s more, machinery might have to be written off at higher interest over less time – possibly 8.5% over just 10 years, which is another $4,572/year (0.164 cents/pound).
At this point, your investment has grown to $158,250 and your capital costs have increased by more than $16,000 per year. No free Sundays for you. But wait – there are things to offset these costs.
First, by eliminating the eight hours of work on Sunday, you’re saving the electricity you would have used to run the laundry (assuming the water, fuel and motor horsepower costs are the same per pound either way). At 6,000 square feet of space and an estimated 4 watts/square foot for lights, you should save nearly 10,000 kilowatt-hours per year
(24 kwh/hour x 8 hours/day x 52 weeks). If electricity costs 10 cents per kilowatt-hour, that’s about $998 per year saved. OK, it’s a start.
Also, you will save the cost of a full-time supervisor for the Sunday shift. At $12 an hour (plus 30% fringes), that’s another $6,490 per year saved. Now we’re cooking.
Finally, and most significantly, you must carefully assess the effect of changing hours on your direct labor force. In this case, the laundry runs with 12 people per eight-hour shift every day – or about 672 operator-hours per week (80 pounds per operator hour). You’re certain that by adding one more person (on the small-piece folder, perhaps), you can do the extra daily poundage with 13 people working only six days a week – or about 624 operator-hours per week. At $8.50 per hour plus 30% fringes, this saves $27,580 annually in direct labor.
Now the tide has turned. The investment in one extra turn of linen (and some other stuff) can allow you to operate one less day a week – and save the hospital money, too. You can save it about $35,000 a year in labor and electricity costs. This represents a 4 1/2-year simple payback on its total $158,250 investment. Not bad. Even after capital/debt costs, you will save the hospital almost $19,000 per year. And you get to read the Sunday paper at your leisure. Have a great day.

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