Coming in November – Benchmarking for Laundry Operators
Next month’s Textile Services magazine will include a primer on benchmarking for laundry operations by a pair of consultants, Bob Bowe and Michael Dodge of Performance Matters, Columbia, SC.
The authors, a senior consultant and industrial engineer, respectively, begin by posing a question: “What is a benchmark?” They then define a benchmark as “something that serves as a standard for others to measure against.” They further note that, “The advantage to using benchmarks is they may identify opportunities in the operation to improve quality, efficiencies or throughput. Comparing plants to a known standard may help provide return on investment (ROI) expectations for capital projects to offset labor costs. Amid today’s labor challenges, the value of benchmarking is even more pronounced.”
As for how a laundry operator should use benchmarks, the authors identify several “key production indicators (KPIs)” that often serve as benchmarks. Examples include:
- Pounds per operator hour (PPOH)
- Therms of natural gas used per pound of linen produced
- Kilowatts of electricity used per pound of linen produced
- Gallons of water used per pound of linen produced
- Inventory (garment and linen) costs as a percent to sales
On average, they say that these items combined represent about 40% of production costs. The beauty of using pounds vs. revenue as a metric is that revenue per pound can vary greatly across markets, while pounds provide a more stable measure of production. However, the product mix of pounds will cause large differences between facilities. Likewise, the amount of automation in a facility will cause a large disparity when benchmarking/measuring individual facilities. It is important to pick “like” facilities to benchmark against. The more similar; the more information one can glean from the comparison.
The first step in a benchmarking program is to identify the KPIs to use in the effort. The second is to identify other facilities that would be good to benchmark against. If the company owns several plants that are similar, the company can benchmark against itself. Operations with only one facility must get information from other companies to compare. Even with multiple facilities, it is often helpful to compare with outside operations to see other ideas and approaches to similar challenges. Where does one find the facilities and information to use for comparison? Company managers with similar operations across North America may have personal relationships they can use to get information. TRSA and other industry groups have information on benchmarking for various categories as well (see examples below). Finally, third-party companies (vendors, consultants, etc.) have established peer groups, including cost groups comprised of non-competing independent companies from across the industry to share this kind of data.
The authors offer several tips for effective benchmarking. For example, initially, don’t overextend and try to benchmark all available KPIs. The influx of data can overwhelm an operator. This, in turn, can lead to “analysis paralysis.” Remember that collecting this data takes valuable time and without analysis and action taken from the findings, this time is wasted. Initially, focus on PPOH (Pounds Per Operator Hour). PPOH is an encompassing metric that addresses the overall efficiency of the operation. Managers can develop action plans, both labor and process improvements, based on this data.
PPOH is calculated by measuring the pounds of laundry processed in a given time period vs. the number of labor hours needed to process these pounds of products. Typically, soil pounds are used in this calculation. However, some laundries use clean pounds or calculated wash weight to determine PPOH. Ensure that the facility used to benchmark uses the same approach as the facility to which it’s compared. Soil pounds are captured at a soil scale prior to washing. Understanding the soil factor for each item produced will enable a plant using clean weight to compare with a plant using soil weight and vice versa.
Another suggestion is to limit production hours to employees who are actually involved in the labor directly used to produce products. It’s better not to include janitors, drivers, stockroom associates, managers and supervisors in this calculation. Also ensure that benchmarked plants are using the same positions/operations in their calculations.
Laundry Classification (Product Mix) greatly affects the anticipated PPOH. Industrial laundries have higher PPOH than Food-and-Beverage (F&B) laundries. Medical and hospitality laundries with automation – pickers, feeders, folders, baggers, etc. – will have higher PPOH as well. Mat facilities will probably have the highest PPOH due to the heavy nature of these products and the small number of hours used to process them. A truly mixed plant will usually have a lower PPOH. Ensure that the plants used to benchmark/compare have a similar product mix. …
Watch for the full article, titled “Benchmarking for Laundry Plant Operations,” on pg. 18 in November’s Textile Services or click here for a sneak preview of the full-length piece.
One more thing … TRSA offers members and nonmembers a diverse range of publications to assist laundry operators seeking to benchmark various aspects of their operations. Examples include:
- Industry Performance Report
- Plant Employee Compensation Report
- TRSA Healthcare Benchmarking Report
- Lodging Linen Loss Reduction Guide and Benchmarking Study
For more information or to order, click here.