Content about Steve Kallenbach

UNIFORMS/WORKWEAR MANUFACTURING: STEVE KALLENBACH, AMERICAN DAWN, LOS ANGELES, CALIF.

Merchandise control is such a huge area of any processing plant, from choosing the right textile to processing it correctly to getting it back after delivery. Any of these three areas can make or break a laundry, whether you service inside or outside customers!

Product Selection and Placement — Choose the right textile for the application, getting the right product in the right place at the right cost (price).

Buying the cheapest unit-priced product isn’t always the lowest cost. And it isn’t always the best answer for the customer or you. What quality and other attributes do your customers expect, or can separate you from your competition?

What are the positive “wear life” ramifications for your operation? What does an improved product do to your rag-out percentage? As operators, we need to measure true cost and not just textile price. Plus, it is important for you to balance your product selection between marketing and cost issues.

Life-Cycle Costing — This can prove what is right for your operation. If you buy a textile at 30 cents per unit and it has a life of 10 washes, the life-cycle cost is 3 cents per serving. If you buy a textile for 40 cents per unit and it has a life of 20 washes, the life cycle cost is 2 cents per serving. In this example, by spending 30% more on the product, you actually gained 100% servings and your cost is 30% less.

Freight Cost Considerations — This is a huge consideration when looking at cost. And there really is no free lunch.

If your supplier pays the bill, it has to be worked into their cost. Many times, especially in larger metro areas, it is more cost-efficient to cut your own freight deals and pay it yourself. Additionally, consolidating your shipments instead of a lot of small orders can save you a lot of money. This is best handled by buying large put–in buys monthly rather than weekly.

Product Integration — Does it meet or exceed the plant standard? Does the packaging and case pack affect the put-in labor? Does the fabric match your current offering in color, weight and weave? Is it “too good” for the standard, causing the integration period to drive customers to want only your new product?

Processing — Improper soil sorting, chemicals overuse, formula water levels, under-loading, formula time, formula temperatures (heat) or extraction can cause you to inadvertently wear out products prematurely.

Some key results of improper processing are alkaline hydrolysis; shrinkage; redeposition; bleach damage; placket crease; thermal shock; polyester heat damage; excessive linting, pilling or fading; hanger molding; and compression wrinkles.

It is important to work with your product supplier and chemical company in reviewing this issue, as these problems can typically be discovered and solved fairly easily.

Loss and Abuse Recovery — Some companies count their soil, inspect it, and charge for abuse and/or replacement. Other companies don’t count and simply charge an “inventory maintenance fee” to cover average losses.

Answer these two questions: How many pieces are you putting in for inventory maintenance to cover your loads? How many pieces does your loss/abuse revenue (whether direct or in a maintenance charge) cover?

The difference between these two numbers could show you the black hole of missing merchandise. If you are putting in more than you are getting paid for, and you are using the maintenance fee, it would be apparent that one or more of your accounts is abusing the system by either damaging or losing more merchandise than you are recovering through revenue. You may have to isolate these accounts and put them back on a soil count system rather than a maintenance program.

Product Reuse — Most operators do a marvelous job in this area. Examples are using downgraded bar mops for turk towels, dyeing hand towels for automotive cleanup, etc. As you choose products, it is important to consider their “second life.” Otherwise, you must measure your rag-out cost and choose a product and placement that provide the longest life. If you are ragging out products directly from first life to junk, consider a second-tier product.

Facility Security — Flat goods should be held within a fenced “crib,” where only authorized employees can enter. Your backup inventory area should also be secured so that unauthorized personnel cannot get to it. Your stockroom should be secured as well, with only authorized employees allowed within. If you cannot crib your areas, then paint a bold yellow line on the floor.

It’s important to post “Authorized Personnel Only” signs. Cover this issue in your orientation documents and then reinforce your security rules at every employee meeting. Specifically, it should be against company policy for a route person to pull his/her own load or fill his/her own garment orders. It isn’t that route personnel typically “steal” the goods. Many times, uncontrolled merchandise ends up at your customers and they are not billed for it. Any good route person worth his/her salt has extra goods on the street. We just shouldn’t invite this practice.

There must be a proper paper trail in order to control inventories. This means even if a manager is filling a “shortage,” there should be a signed document from a manager one level higher granting authorization. Personally, I would authorize this sort of activity only at the general manager level. All movement of merchandise to and from your operation should be secured with a properly executed inventory control document. Train your plant employees to fill these orders only with proper authorization.

Many operators install video equipment and signage at all exits to monitor all merchandise movement. If this is done thoroughly and talked about in your meetings, employees will be motivated to assist you in merchandise control and understand that this is a high cost.

Put-In Management — Start with any control period (week, month, quarter), and calculate your total starting inventory. Now add organic growth: the invoiced increases in pieces per product, as well as new items added to accounts. Subtract invoiced decreases in pieces by product, as well as item cancellations from accounts. Now subtract your product “down-grades” and “rag-outs” from the mix, by product. The inventory balance is what you should have in stock. If you are still short product to fill your loads, you have identified a “black hole.”

Stockroom Management — Set up visual standards for your grading and establish at least three grades: near new (A), standard (B) and utility (C). Keep new and near-new goods separated from standard goods. If an order comes in for standard goods and cannot be filled, it should not be an easy task to fill with new. Implement a second-level management authorization to fill B grade orders with A grade garments. And if goods need to be ordered, the highest level of management should be in the review/approval cycle.

Route Control — In some cases, shrinkage can occur through theft. But in most cases, shrinkage occurs when extra (free) merchandise is given to customers. Try auditing suspect routes unannounced. Validate the goods being sent out on the load, and have a manager count them. When the truck comes in, count in the soil, count in all clean return, and balance it against the load sheet. Discuss any discrepancies with the route person and the owner and/or general manager present. Take it seriously, and they will, too.

Taking a “route ride” is probably the most effective way to get a handle on extra merchandise. This is an audit of the route person rather than the customer. At the customer site, look for extra inventory and how the soil is coming in. Are bar towels being used for grill pads? Are shop towels being used to wipe off Bondo putty? Document the ride-along and review findings with the route person and key management.

Inventory Correction Initiatives — One way to make merchandise control fun to have an annual or semiannual “inventory correction and account growth” contest, to balance inventories with invoices.

Typically, routes are paid new-business commission on “add items” only, not increases. In this case, authorize commissions for contest length (six weeks is recommended) on all inventory increases. This allows the route to fix the invoice by adding the additionally used inventory instead of bringing it back. The commission will motivate any route person, as he/she never gets extra money for fixing invoices.

Given the choice of bringing goods back and putting them into your “amnesty cart,” experience has shown that most route personnel prefer to fix the invoice and make some money. Additionally, when customers are faced with either sending the goods back or paying for it, they will typically approve adding it to their invoice.

As you think about your own operation, use these 12 steps to evaluate and measure where you are.

CHEMICALS SUPPLY: MARLENE WILLIAMS, ANDERSON CHEMICAL CO., LITCHFIELD, MINN.

Textiles are vulnerable to attack from a multitude of misuse situations. One that is easily overlooked is the laundry environment: a chemical, thermal, and mechanical constant for every wash cycle.