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Just How Do You Define Linen Rental?

Eric Frederick |

I've noticed over the past several years that there isn't a consistent definition for "linen rental."
Many years ago, the market was dominated by Customer Owned Goods (COG), also known as Not Our Goods (NOG). Under this style of service, the laundry provided the linen carts, picked up the soiled linen, processed it and returned it to the customer.
The linen's owner was responsible for maintaining the proper inventory level, while the laundry was responsible for properly washing the linen and, most importantly, making sure it didn't become mixed with any other customer's linen.
It was difficult and time-consuming to keep each customer's linen separate, especially when it came to leftover linen (less than a full load) and rewash linen.
Many laundries began to develop linen rental programs in which the laundry owned the linen and rented it on a per-piece or per-pound basis.
The customer no longer needed to invest money in linen inventory, and the laundry was able to mix linen from various customers and thus avoid short loads. Since all the linen was owned by the laundry, the time and effort to keep various accounts separate was no longer needed. This type of service has gained popularity over the years.
Replacement costs for linens became a problem. How did the laundry appropriately protect its investment in textiles and make sure that a proper level of profit was maintained? Since many purchasing decisions were made strictly on the cost-per-pound basis, laundries began to back out some of the linen replacement costs from the per-pound or per-piece figure and find ways to charge directly for this cost. This allowed the provider to show a lower cost per pound or piece for rental.
This additional cost charged to the customer per billing cycle often went unchallenged. Some contracts didn't give the customer a way out of the agreement, so the customer just ended up living with the additional cost.
I've run across a new system for linen rental during the past two years here in Virginia. The laundry owns the linen but actually handles the account as a COG account. All the linen is kept separate from all other accounts, and the client is billed every time linen is added to the system to correct a shortage.
The advantage of this system for an institution is that the laundry is in charge of purchasing linen and increasing the inventory as needed. The disadvantages are the same as they were with COG. Adequate systems must be in place to ensure that linen is not mixed and rewash is kept separate. This is made even more difficult because all linen is owned by the laundry and looks the same.
Traditional linen rental still exists where the customer only pays a set amount per pound or piece for the rental. This cost includes all but exceptional linen replacement costs. Such a system may look more expensive to the purchaser at the start but it's actually less expensive because there are no hidden charges.
It's no wonder, with the various types of linen rental programs out there, that purchasing agents and administrators are confused when they try to entertain proposals.
 

About the author

Eric Frederick

Carilion Laundry Service

Director of Laundry Services

Eric Frederick is director of laundry services for Carilion Laundry Service, Roanoke, Va., and past president of the National Association of Institutional Linen Management (NAILM), now called the Association for Linen Management (ALM). He’s a two-time association manager of the year. You can reach him by e-mail at efrederick@carilion.com.

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