Realistic pricing cuts waste in European laundries29 April 2016
Whitney Hall, a winner of the Worshipful Company of Launderers Travelling Scholarship, believes a more robust pricing policy similar to that adopted by European launderers could pay dividends in terms of linen loss, abuse and sustainability for UK businesses.
Whitney Hall is development director at Crystal Laundry Services, a National Laundry Group (NLG) partner, providing specialist quality linen hire for London’s hospitality industry. She is an active member of the TSA and an enthusiastic participant at NLG conferences. Previous experience at a global investment bank – she is a FSA graduate – gives her a unique insight into the financial aspects of running a commercial laundry.
She says: “Winning a Travelling Scholarship was an excellent opportunity to visit laundries of various sizes across Germany and Netherlands, and has highlighted that some of the challenges we experience in the UK are global challenges across all industries. Conversely, some problems are not faced to the same degree on the continent, due to cultural differences and the different mentality of suppliers, staff and customers.”
The UK laundry industry has always been subject to significantly lower pricing than is economically viable, due to intense competition within the market and strong-minded clients. Nowadays, businesses within the hospitality and leisure sector strive to gain a competitive advantage through focusing on service standards and guest satisfaction/experience.
However, although the specification and quality of linen has increased, fierce competition in the linen hire market makes increasing service prices difficult. Therefore, margins are being eroded year on year by the ever-rising cost of meeting these standards, principally in terms of labour, textiles, energy and diesel (see the Laundry Cost Index at www.TSA-UK.org).
At the same time as clients are demanding higher quality linen specification at lower prices, there is also a throwaway mentality across the hospitality and leisure industry.
Linen loss and abuse within the industry is a significant problem, whether the items are being abused for cleaning purposes, disposed of, taken home, or stored away in forgotten area. This attitude is a consequence of globalisation, which has increased the availability of goods and products. As items are readily available, often it is thought "it's ok because there is loads of it". It is disappointing to see, and is costing the industry and the environment significantly.
In the UK contracts are typically priced by item type, with customers largely dictating the price they expect for the linen they need. Unfortunately this does not always reflect the effort involved in processing which impacts on margins where the cost of processing linen increases, but competitive tension in the market prevents laundries from passing on costs to the customer.
Among the laundries visited, it was apparent the European approach to the problem of increasing demand, quality and specification of linen is to price customer contracts by linen weight (kg). Specifically, linen is charged to the customer by "dry weight" delivered, thus a heavier duvet or towel that takes longer to wash, process or dry due to its higher specification is charged at a higher relative price. This approach is widely accepted by the European customer base and is beneficial to the laundry, as it allows higher costs to be passed on appropriately.
Waste reduction, efficiency and sustainability focus
Our European neighbours not only focus on efficiency and price, but also embrace the ethos of care for their products and employees, eventually impacting positively on sustainability as a whole. This viewpoint filters through from linen distributor and launderer to the customer base, evidentially showing an appreciation for linen and its value.
European businesses operate within a relationship of honesty, trust and respect for each other and their employees. Although markets in Europe are arguably as competitive as in the UK, it is recognised - and accepted - by customers that services that incur costs to the supplier should be paid for. Because charges are incurred for the loss and abuse of linen, neither are considered acceptable by the laundry or the customer. This mind-set spreads throughout the whole chain. A general manager at one of the German laundries we visited said his linen losses were less than 0.01%, and linen abuse was negligible. Charges are also in place for cleaning cages, laundry bags and unreturned cages.
At the laundries we visited hospitality laundry was not packed in shrink-wrap, but placed in re-washable fabric cage liners that protects the linen from external elements. Should delivery be requested in packs, items are separated either by biodegradable paper or thin plastic strapping. In the UK, it has almost become standard practice to wrap clean linen in plastic, which is wasteful as the plastic is not reused.
Education and training for staff
European laundries are actively involved in training employees. Numerous hotel and housekeeping apprenticeships exist and university courses and training centres that focus on linen requirements and handling emphasise the importance of linen management. Attendance at these courses is strongly supported by the employer. This education also spreads into the laundry itself, with laundry and chemical suppliers involving younger generations by opening up their factories for industry days and school trips.
High-level management or ownership of German laundries typically require a Masters in Textile Cleaning qualification, comprising an apprenticeship of three years, and three years of industry-specific work experience. Although the requirements for a senior management position have recently become more flexible - allowing positions to be filled with people who have 10-12 years of management experience within a laundry - this is still a relatively onerous process, compared with the UK.
Staff empowerment and customer feedback
As a performance and efficiency-driven industry, customer feedback - positive or negative - was consistently reported to all members of staff in the laundries, along with hourly or daily pieces per operating hour (PPOH) updates. Such transparency of their performance helps staff understand the importance of their work quality in the context of the final product. It also helps motivate them, and aligns their goals with the quality standards of the business.
Regular migration of staff to different departments is encouraged by all laundries ensuring staff have an understanding of the different processes across the laundry. As a result, they understand how their role fits into the wider laundry process and gain broader experience. Perhaps even more pragmatically, this also ensures there is always cover in the event of absences.
The suppliers' role in machinery investment and maintenance
Continuous reinvestment, research and development in all areas of the laundry were key to the success of the businesses we saw. This included chemical usage equipment, laundry processing machinery and transportation - investments geared towards minimising waste and improving environmental sustainability. Systems were highly automated, with management statistics regularly monitored. It gave a relative sense of calm to the laundries, which have minimal staffing relative to the vast quantity of pieces being processed.
It was impressive to see how laundries and their suppliers worked together to project manage and develop the facilities within the laundries. Both supplier and laundry contributed to the sustainability and positive impact of the improved laundry operations on the environmental footprint for the next generation, while targeting, and meeting, the KPI's set by the laundry.
Detailed sustainability programmes were in place throughout each of the laundries visited. CO2 reduction, efficient and cost effective energy consumption, water recycling and heat exchange technology were consistently implemented along with low temperature washing.
The companies basically had a choice: invest heavily in either heat recovery systems or in low temperature washing, as the benefits of heat recovery in low temperature environments is less effective.
Most of the laundries we visited were targeting reduced steam consumption, which I understand is becoming a feature of the laundries in Germany and the Netherlands. One laundry had achieved its target, becoming completely steam-free, while another generated its own electricity on site using a gas-powered engine in a combined power station.
The wasteful mentality observed in the UK, along with customers' limited cooperation in controlling and compensating the laundries for loss and damage is a large burden on the UK laundry industry. UK laundries find it difficult to achieve margins in order to reinvest into new environmentally friendly and efficient machinery. Conversely, the significantly lower level of stock loss and abuse we witnessed in Germany and the Netherlands is positively incentivised by monetary compensation for reduced waste. This has enabled the European laundries to focus on making higher margins by improving the operation of their business, rather than absorbing heavy monetary costs in relation to linen reinvestment.
It is evident that the laundries we visited face a lot of the same challenges we do in the UK, including increasing costs of utilities and labour, and a growing awareness of the impact of the effect processes and wastage are having on the environment.
However, European laundries are able to maintain profit margins by pricing according to the complexity and cost of work being performed, minimising waste and passing increased costs on to customers, while also reinvesting profits in efficient and sustainable equipment and processes.
The success of these European laundries is underpinned by the positive attitude of their customers, management, employees and suppliers who care for the product, service and the impact of the processes on the environment. The government also has had a large role to play in incentivising environmental sustainability and reduced wastage across all industries, not just laundries.
Taking action and educating the current and next generation to adopt a culture of appreciation for the items they use and the costs associated with providing these items will help to build a more responsible industry and customer base, with limited waste, that will benefit our industry as a whole as well as future generations.