CLEVELAND – High-tech solutions may not be for every textile rental operator, but the operator with the capital and the courage to invest in them has much to gain.
Industry consolidation has led to increased price competition and strains on profitability, George Ferencz, vice president of the Textile Rental Services Association (TRSA), told attendees at the association’s recent Tech Summit.
“We are not dealing with just a vacuum market anymore, where you do business in your market and may have one competitor,” Ferencz says. “We’re dealing with larger forces now, national chains. That’s not good or bad, that’s just the fact.”
And there are other factors cutting into profits, including the rising costs of vehicle fuel, natural gas and oil, water, labor and insurance.
But as competition has grown, so has the level of management solutions that are available to assist. New Internet, mobile communications, data management, garment tracking and manufacturing technologies are just some examples that Ferencz cited.
Technology can increase production, reduce labor, improve efficiency, increase accountability, save resources, provide greater control to management and enhance customer services, he says.
“If you can find ways to adopt it and make your staff accountable, that helps you when you’re dealing with unions because you can prove productivity ... and, on the management side, you can have reporting that makes managers accountable as well. When everyone is accountable, operations run more efficiently.”
Without some shift in the way business is done today, companies risk allowing their profitability to erode past the point where they can invest in the future, Ferencz warns.
“Innovation is what separates your company from the competition,” he says. “Innovation is what leads to profitability.”
In the case of gasoline and diesel fuel, costs that accounted for 3.9% of total industry sales in 2003 will rise to an estimated 5.9% of total industry sales by the end of this year, according to Ferencz.
“When you go from 3.9% to 5.9%, those 2% have to come from somewhere, and right now they’re coming from the bottom line.”
Doing something as simple as keeping better track of the mileage of your fleet vehicles, as well as where they are refueled, can send up red flags.
Perhaps the price of gas near your plant is $2.05 a gallon but your driver likes to stop at a point along his route where the gas is $2.25 a gallon, Ferencz offered as a example. Recognizing trends such as this and countering them can create savings almost immediately.
“It takes, one, collecting the information somehow ... and two, using the information, developing spreadsheets or systems internally in order to track that information and use that data.”
Route optimization software can help companies eliminate routes and reduce their costs by roughly $67,000 per route, he added.
“Do your drivers stop where it is most cost-effective for you or do they stop where they want to stop and that’s efficient for them?” Ferencz asked.
During one of the breakout sessions, Michael Deeb, a regional director for Saucon Technologies, demonstrated how his company’s global positioning system (GPS) technology can “follow” any vehicle that carries the GPS unit under the hood.
Attendees watched as icons representing buses moved from point to point along a map of Jersey City, N.J. Scrolling over one of the icons immediately popped up a smaller screen that identified the bus, the driver, the speed of the vehicle and its location.
Such data can be useful in tracking a driver’s progress – is he on time or does he seem to be stalled? – as well as help to prevent theft and misuse of company vehicles, Deeb says.
Using handheld systems on your routes can set you apart from your competitors, says Alliant Systems’ Jeff Belcher, by providing what a customer really needs: clean invoices, accurate adjustments, a clean copy of the invoice absent any manual calculations and the ability to view and print their own invoices from a Web site.
John LaCarte, president of Model Cleaners, Uniforms and Apparel, shared his real-world experience with implementing handhelds in his route operations. The first-generation business started in 1987 and became fully bar-coded in 1994.
“It established a culture in our company, in terms of using technology and tracking, and it created a language for us to communicate with our customers.”
Model Cleaners processes 25,000 garments per week and utilizes a 10-route operation, with half the drivers using handhelds.
Those route service representatives spend less time making manual adjustments and calculations and more time servicing customers, LaCarte says.
“There's no question there’s efficiency improvements here and paybacks,” he says. “We’re probably saving 2 to 2 1/2 hours a day on (account) settlement in our office, which is significant.”
Using the handheld units has become natural for both drivers and customers, he says, thanks in large part to global shipping companies like FedEx and UPS.
Controlling the impact of natural gas and fuel oil prices again comes down to tracking the data and making comparisons, Ferencz says. Maintenance software programs are a must to ensure your heat-generating equipment is operating efficiently. “Good maintenance is good fuel economy.”
It also may be worth investing in more efficient boilers or other equipment. There could be a significant investment, Ferencz says, but the increased efficiency will help the equipment pay for itself over time.
Higher water and wastewater costs drive the need for more efficient equipment, improved chemicals, soil-release fabrics, and water recycling and reuse.
Converting to an automated washroom can reduce labor costs by approximately $600,000 a year, Ferencz says.
Representatives from G.A. Braun gave a presentation that illustrates how machines talk to each other without employee intervention at plants like Miller’s Textile Services, Linen King and Unitex Textile Rental Services.
There are many opportunities to apply technology to save money, increase profitability and gain new business, Ferencz says, but it’s up to textile rental operators to explore them.