Keeping Rising Laundry Service Costs Under Control (Part 1)

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(Image credit: Alissa Ausmann)

“With many operational costs—such as utilities and labor—continuing to rise, how can I cut expenses? What strategies can you suggest for running a more cost-efficient laundry?”

Equipment Manufacturing: Gary Ostrum, G.A. Braun, Syracuse, N.Y.:

As the manufacturer representative among this fine group, I know there are those who are expecting me to talk about the incredible impact one can make on an operation by just spending more money on new high-tech equipment. But I will leave the discussion of washing without water, drying without heat and ironing without roll pressure to the blogs and spam we are swamped with these days.

Not quite a decade ago, G.A. Braun embarked on the quest of becoming an ISO-9001 certified manufacturer. We still hold this certification today. In my opinion, the processes that this certification program and others make available to all in our industry—Six Sigma, lean practices, kaizen principles, etc.—afford laundry operators the best opportunity to reduce operational costs and increase efficiencies.

These programs also afford the best opportunity to improve quality, client/end-user satisfaction, speed to market and technological advancements.

My attempt to explain any of these programs in the upcoming paragraphs would not do them justice, but I see some major points defined within most effective programs.

  1. Understand and define the capability of what one has now—not only with equipment and operator production, but in every department and team in one’s facility.
  2. Measure and have metrics based on optimal quality and production levels for everything, with quality and client/end-user satisfaction topping the list. If one does not have a target and goal to meet, one won’t succeed.
  3. Cut out all waste. How many steps are wasted by one staff member? How many unnecessary miles driven by one’s trucks? How many steps in cutting a PO, hiring a new employee? How many times does not measuring twice before we cut double our costs of operation?
  4. The program must be bought into by the entire organization, starting at the top of the organization. If we talk the talk, we must walk the walk.
  5. Reviews, enhancements and modifications to the process must occur regularly, consistently and include the entire team. There is no “one and done” here. If the processes are not maintained and improved, they will be lost. It is no different from a piece of equipment. The efficiency of one’s newly purchased, high-efficiency piece of equipment can be lost with a single OEM operating specification being out of line.

How does one go about implementing such programs in a facility?

Private companies that specialize in these activities are fee-based and therefore somewhat committed to your facility’s success in getting certified or achieving the desired end results, due to their mission and expertise.

Universities, non-profit organizations and local business associations may provide help establishing such programs with little or no cost. While not quite a “get-what-you-pay-for” scenario, one has to realize that the representative may have great intentions but little experience and/or expertise.

For a program such as ISO certification, one must go through a fee-based formal process. But every organization has team members who come from various backgrounds. One may have a Six Sigma black belt, a background as a kaizen team member with a past employer, or have experience in lean practice concepts. It is great for an organization to recognize such team members and put them in a position to improve the entire organization.

I started my answer this month a little light-hearted, and of course new technologies are available to reduce operating costs in one’s plant in just about every area imaginable.

But the money spent on these technologies can only come back to the operation when expectations are met, exceeded and maintained.

Long-Term Care Laundry: Brian Barfoot, Aberdeen Village/Aramark, Olathe, Kan.: 

Whether you’re laundering and/or distributing 50,000 or 5 million pounds of laundry each year, two things are for certain—cost will increase and we'll be asked to manage a budget as lean as possible!

“What more can be done for managing overall laundry expense?” is the frequent question asked during fiscal year budget preparations. Utilizing industry best practices and the consistent daily focus on the core of our business is what I think of first when having to address our financial realities.

To begin with, what are the highest costs in our business? Here’s my top three list:

  1. Labor. Usually No. 1 on anyone’s budget.
  2. Textiles. Cotton pricing has changed the game for how manufacturers make their products. How many different types of blends can we possibly have?
  3. Utilities. Shouldn’t we have this figured out by now? When’s the last time a capital expense was approved for equipment replacement to utilize the latest efficiency improvements?

So, what can we really do to manage an ever-increasing financial challenge? Here’s my top five list:

  1. Labor. What do your employee production schedules look like? Do you consistently observe and verify that you’re getting a full day’s work for a full day’s pay? Is the prevailing wage competitive within the industry based on economic measures in your region, state, county, city or town? Is your HR supportive of tracking this annually? Sometimes you really do get what you pay for! What is being done with employee development, recognition and corrective action within your department? Are your new-hire onboarding and ongoing training programs resulting in having long-term team members who support the consistency and efficiency needed?
  2. Preventive maintenance. Ensure your systems are running at maximum efficiency. Do you have the experienced staff to guarantee this?
  3. Textiles. How is your relationship with your textile provider? Is it continually supporting your cost-saving purchasing efforts? Require that it provide you with at least an annual review of what it and the manufacturers are doing to help. Sometimes this discussion needs to be monthly, based on the uncertainty of the global textile market. Do you need the “Cadillac” towel or washcloth for every use?
  4. Par/inventory controls. Do you have a linen utilization committee or some type of group within the organization that can meet, review and provide action plans for daily use of linen within a hospital, senior living facility, clinic, etc.? Is someone in your laundry department tracking and reporting usage on a daily basis? In a hospital patient’s room, does the linen need to be changed daily?
  5. Outsourced laundry services. Are you getting the maximum efficiency with your local laundry? Is it returning what it picked up? What does that relationship look like?

Chemicals Supply: Carrie Armstrong, Ecolab, Eagan, Minn.:

The operational costs of running a laundry are on the rise. Some increases in labor, energy, linen, water, gas, electricity and chemicals are substantial. To run a more cost-efficient laundry, knowing the numbers is a start.

Reduction in operational costs is a long-term project, and one that requires continual evaluation, data analysis and updating. It is a project that requires partnering with your linen, equipment and chemical vendors.

Consultation with your vendors will help you through the sharing of responsibility for cost reduction, and also afford you expert advice on achieving the goal of running the most cost-efficient laundry. With their help, a plan can be made to help reduce costs, become more efficient and provide clean, quality textiles.

In a laundry, many operational costs are interrelated. If one aspect of the process is changed, it affects others. These can be positive or negative effects. Each of the main operational costs could be discussed in detail; however, I’m going to touch on just a few procedures of processing laundry from soil sort to finishing.

What are the soil-sort procedures? Are the textiles sorted by classification, soil level and textile type? Are the required wash formulas available? Are the formulas selected properly? Are the formulas and chemistry structured for quality and extended linen life? Is the machine loaded to optimum? Is the equipment in good working condition? Are the machines unloaded and directed to the finishing area promptly?

The answer to each question affects the other, as well as overall costs. Sorting heavy soil and light soil may result in rewash if washed on a light-soil formula, leading to increased labor, energy, water and chemistry and reduced linen life. An overloaded washer may also result in rewash with the same consequences. Reduced linen life results in increased linen-replacement costs.

Start with the numbers and develop a plan that includes consulting with your chemical supply representative on how to increase efficiencies in the laundry, with your equipment vendor on the laundry equipment, and with your linen supply vendor on quality linens.

Keeping you informed of current technologies that can help laundries become more efficient and reduce costs, as well as continuing to develop new technologies, are the goals of the industry.

Consulting Services: Sam Garofalo, Technical Consulting Associates, Charlotte, N.C.:

Identifying the cost issues in a laundry operation is a lot easier than implementing and maintaining a successful cost-reduction program. Plant operators routinely walk by thousands of dollars in visible savings every single day and ignore the problem because over time they have become desensitized to the details.

In my practice, while discussing the findings with clients, it’s common to hear someone acknowledge that they already knew about this or that. My response is, “If you saw this problem, why didn’t you do something about it?” The reality is that even the most efficient management team falls prey to apathy and a “blinders on” paradigm.

A serious, open and focused look at your operation, with one of several different industry standard manuals in hand, is the perfect way to start. Industry standards are usually “one size fits all,” which is OK because you are looking for reasonable numbers to set your benchmarks.

Produce an accumulator report to track the line items weekly. Department heads should provide data from their departments on a weekly basis. This data should be entered into the accumulator by the owner or general manager, who will compare your numbers to the industry standards.

In most cases, labor will be your highest cost. As an example, plants that are messy and cluttered can add as much as 20% to labor costs simply because the workers can’t move carts around.

Another good source of data can be the chemical injection system, which should give you invaluable information on how many formulas were run and the costs per formula. Chemistry is usually only 2-3% of costs; however, this data will isolate the wash aisle, which is the heart of your production. Also included in this data should be soiled weight logged, aiding in showing the soiled-to-clean weight ratios. If there is one indicator that is really important, it’s making sure that you get the proper load sizes.

At some point after the cost trends of your facility are clear and stable, you may want to address the efficiency of your production equipment and how it impacts your costs. My feeling is that you shouldn’t spend one dime on production equipment until you have a sustainable cost accumulator in place. A good program in place and consistent data will not only guide you in the right direction, it will direct you to the best place to spend your capital expenditure dollars.

Equipment/Supply Distribution: Justin Oriel, Garment Machinery Co., Needham, Mass.:

Installing the most energy-efficient machinery in your laundry will help you cut expenses, such as utility costs and labor. Let’s face it—not much has changed in the way commercial washers and dryers look. However, the inside of the machines is where a laundry owner is able to save money.

The faster a washer spins, the more water gets extracted from the garments. The end result here is that when the garments make it to the dryer, the dry time will be shorter, as there will not be as much water in the fabric. Less dry time equals gas/energy savings as well as labor savings. The shorter the dry time, the more throughput the laundry will see, which therefore lessens the necessity of paying employees overtime.

When purchasing newer machinery, make sure you look at the optional features that might be available. Dryers have some pretty cool features, such as residual moisture control, which will sense when the clothes are dry and shut the machine off. Another key dryer feature is a reversing cylinder, which will prevent tangling of garments. This helps improve the overall dry time of the laundry.

Most new washers today are customizable in their programming. Some washers use an automatic weighing system, in which the machine will sense the weight of a load and then choose the right amount of water for washing. This is a huge utility saver in itself.

Again, setting equipment costs aside for just a moment, I would encourage all laundry-room operators to weigh the pros and cons of putting in new machinery. The energy savings alone might be enough of a reason to replace machinery sooner rather than later.

Check back tomorrow for the conclusion!

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