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What Challenges Lie Ahead in 2006? (Part 2 of 4)

What issue or issues most greatly affected your operation and, more generally, your specific industry segment during 2005? What are the primary issues that your operation and your industry segment will face this year?COMMERCIAL LAUNDERING: Richard Warren is the general manager of the Institutional Services Corp., Conway, Ark., a commercial laundry that provides cog, rental and linen distribution services for healthcare clients. His experience also includes OPL and industrial laundering, linen supply, and leather/fur cleaning.
Maintaining adequate staffing is one of the biggest challenges we face. Not enough people to do the work leads to extended hours. New workers are not as efficient as the experienced workers, and this leads to extended hours. Extended hours and lack of efficient practices brings lower production rates and that brings overtime.
Machinery is sometimes an answer. A lot of equipment is available, including material handling, robotics, microprocessors, analytical equipment and conveyors. But with space limitations and financial constraints, these items are not always practical.
Production is much like a dance. One thing affects another, and the challenge is trying to obtain the correct balance of staff, machinery, experience and, of course, enough work to keep them all operating.
There is extreme upward pressure on the price of our services. Our clients are not pleased with that trend. So, once again, we see the continuing difference between the server and the served.
The cost of natural gas has become a major consideration, as has diesel fuel for our trucks. This affects our suppliers as well, and the price of their products to us. Of course, our customers are squeezed just as the laundry industry is.
We are forced to look closer at everything we purchase, and even reconsider making that purchase. Reclaiming and recycling equipment are becoming more appealing.
2005 brought Katrina. There is some pretty scary stuff out there that can forcefully humble us. Not only the laundries directly hit are affected, but those that remain operational have added responsibilities as well. We must consider backup positions in many aspects of our operations. Minimally, generators and alternate fuel sources for boilers need to be, at the very least, considered.
While there are some fine and profitable manual operations in the country, they’re not the future of our industry. Proactive managers and administrators must seriously apply technology if they are to remain competitive. This won’t necessarily lead to fewer jobs, but may very well change the type of jobs that are available in our industry. A highly automated laundry will not lead to a net loss of jobs. A closed laundry will.LONG-TERM CARE LAUNDERING: Vicki Elliot is environmental services manager for Kendal at Ithaca (N.Y.), a continuing care retirement community housing 300 residents (independent living, adult home/assisted living, and skilled care).
As the environmental services manager at Kendal at Ithaca, I’ve found that maintaining a reasonable budget and providing adequate staffing were the major issues that affected the laundry operation in 2005 and will continue to be a challenge for me this year.
Kendal at Ithaca is one of New York state’s few continuing care retirement communities. It’s part of the Kendal Corp., a not-for-profit, charitable organization whose primary mission is to serve the needs of older people in our society. Residents’ entry fees and monthly fees provide the revenue upon which the annual budget is based.
My first challenge is to present and maintain a budget that allows for providing Kendal with top-notch service without causing a drastic increase in residents’ fees.
Everyone is affected by the rising energy costs, so I think I’m not alone in facing the problem of increasing costs in all aspects of operating a laundry. I try to predict what increases I will be hit with, but whoever thought I’d be facing up to a 40% increase in gas and electricity?
Supplies and equipment prices have also escalated due to the high cost of gasoline that shipping companies incur and naturally pass on to the consumer.
I find that I need to be conservative in the way I disburse the budget. I rely on a good preventative maintenance program to keep our equipment in good working order, which will in turn make it last longer, and I try to purchase products that are of high quality but also cost-effective.
My second challenge is staffing. I’m responsible for scheduling for the entire Kendal community. It employs 18 full-time environmental services workers, three of whom are dedicated to the laundry.
Each member of the staff is cross-trained in all of our work areas, so I can provide coverage for vacations, absences, etc. My problem is a unique one. I don’t have the turnover that many healthcare facilities are faced with, and the longevity of the staff creates problems. Staff members with five years or more of service are awarded extra vacation and time off. I need to be creative and flexible in my scheduling to make sure all employees receive the time off they are entitled to while making sure I have enough staff to provide adequate services.
I don’t have many of the issues most of my counterparts in the laundry industry face because Kendal is such a strong, successful organization.HEALTHCARE LAUNDERING: Sue Klein is the marketing manager for Share Service Systems, Omaha, Neb., a central healthcare laundry that serves customers ranging from large urban health systems to small rural hospitals. She's been active in the International Association of Healthcare Textile Managers (IAHTM).
The healthcare industry was challenged on several fronts during 2005. Healthcare spending is now 14% of the U.S. gross domestic product, and more than 54% of health systems are operating in the red. Linen, frequently seen as an expense, is an easy target for cost-cutting. With margins of only a few pennies per pound, healthcare laundry providers are faced with tough decisions: lower quality or raise prices – both create customer dissatisfaction. 
Utility pricing also impacted operations significantly. Not only did we face large hikes in the price of diesel for our delivery trucks, our natural gas operations costs increased more than 30% as well.
Labor is always a challenge. Turnover is a reality. Constant training is a reality. Worker productivity is sometimes inconsistent and always elusive.
Looking ahead, we will tackle several new, and many constant, challenges. On the new front, we have chemotherapy laundering procedures to enact.
Learning to profitably handle multiple markets – hospitals with their volume of linen, together with clinics and long-term-care facilities with lightweight, low-volume linen – is a strategic challenge. Do you limit your business to one market? Are there higher margins available in the smaller markets? And, do you upgrade technology hoping to cost-effectively gain productivity with less labor expense?
We’ve faced competition from the prison industry, with low labor costs and no taxes or overhead. Will cash-strapped healthcare facilities look to these nontraditional solutions? How do we compete with an enterprise that is underwritten by the government, and charges 30% less than our cost?
I hope to explore many of these challenges this year. Much of my interest and expertise is in how we present ourselves to our customers, and how we communicate our value to them.
 

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