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Penny-Wise and Pound-Foolish

Eric Frederick |

It always amazes me how poorly we managers treat our laundry chemical representatives. We hammer them on cost from morning until night and will change vendors in a heartbeat because someone else says they can do it for less.
JohnsonDiversey is pulling out of the U.S. market because it can’t get what it considers a fair return on its investment. I’ve struggled to understand why the U.S. market is so different from Europe or the Far East. How did we develop a marketing philosophy strictly based on cost while other markets put greater value on quality and service?
I think it’s time that we take a close look at what we’re doing and why. Are we being penny-wise and pound-foolish?
We’ve all seen energy costs rise rapidly over the past year. Labor costs continue to escalate, and our customers are asking us to keep prices down. Many managers find this an impossible situation and simply give up or, worse yet, hammer on their chemical representative to decrease cost.
If a manager is to keep costs down, then he must be able to increase volume 10-15% per year or decrease operating costs. Adding volume year after year is not always possible.
One of the best ways to decrease cost is to spend more on washroom chemicals. The goal is to create a wash quality that will allow 98% or more of work to flow through the laundry on a single pass. Many managers are comfortable with anything less than 5% rewash and many are running higher than that. They pride themselves on reducing those costs, but this reduction negatively impacts labor, utility and textile replacement costs.
Labor has always been the largest cost of processing textiles, and we waste it when we give workers goods that must be carefully sorted because of rejects. If you’re averaging 5% rewash and you can lower that to 2%, how much labor can you save? The 3% reduction should translate into a 5% increase in productivity, because you won’t have to reprocess the work and your employees will be better able to establish a reasonable pace at their workstations.
Textile replacement costs are normally your second-highest cost. By increasing the amount we’re willing to invest in washroom chemicals, we increase the use of surfactants, alkali, antichlor and peroxide bleach and decrease the use of chlorine bleach, which is the cheapest washroom chemical to purchase.
Many low-cost wash formulas rely heavily on large amounts of chlorine bleach to cover for the more expensive chemicals. Nothing is more corrosive or damaging to fabrics than high concentrations of chlorine bleach. The ability to keep an item serviceable during its expected life is one of the keys to reducing textile replacement costs.
You can also increase the amount of textiles that is available for shipping by reducing the amount that has to go back for rewash or stain treatment. A quality wash formula will also increase the serviceable life of the textile product. Longer service life means reduced cost per use and translates directly to fewer dollars spent on textiles.
Higher utility costs mean we need to make the best use of every dollar spent. Stain formulas normally run with high concentrations of chemicals and at higher-than-normal processing temperatures. By reducing the amount of rewash loads, we reduce the cost of utilities.
Using less water, less gas to heat the water, less electricity to run the washers and the dryers, and less natural gas to run the dryers reduces the cost of doing business. It simply costs less to do it right the first time.
I dare say that there isn’t a laundry in the country that wouldn’t benefit economically from a reduction of 2-3% in rewash even if it doubled their cost per hundredweight.
What manager in the country wouldn’t be willing to spend up to an extra penny per pound to save an additional 3 or 4 cents per pound through labor, linen and utility expense?
Have we focused on the wrong item to control?

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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