The competitive edge

Better infrastructure and faster transportation made laundries’ catchment area grow. Competition sharpened. In order to survive the laundries had to increase operational efficiency.

But how?


As the industrialization unfolded in the 19th century, it revolutionised the supply chains. It split the technologies. The households followed one path, the industries another: the logic of factory production, where hot irons were replaced with huge, heavy and steam heated rotary ironers, that didn’t fit in in the homes and households. Craftsmanship and manual work turned into fabrication.


The fabrication split the laundry tasks, specialised and automated, small enterprises turned in to large-scale operations, and the advantages from economies of scale were reaped. The functions once performed by a single person were divided among many workers. Laundries became factories. Volumes soared and more and more people took part in the production. Complexity and dependencies increased, and cut down hard on degrees of freedom in planning.

published_jan2014Today laundry factories are housed in large buildings with complex flows of goods, score of specialised machines, and up to several hundred people engaged in the operation. Laundering clothes has become a service industry, with the characteristics of the industrial production, such as:

•  Batch sizes (e.g. on the CBW),

•  Stock sizes (e.g. with the customer),

•  Cycle times (e.g. delivery frequencies), and

•  Leadtime (the time from when a batch enters the check-in until it exits the dispatch department).


The competition
With better infrastructure and faster transportation the laundry’s trade areas grew. Competition sharpened. In order to survive the laundries had to perform. Subject to scarce resources, a number of complex constraints and critical priorities, they had to compete on:

•  Product range and design,

•  Product and service quality,

•  Ability to deliver, delivery time and certainty,

•  Flexibility, and

•  Price.

Operating a laundry today requires not only craftsmanship and knowledge of textiles and washing. Economical considerations force professionalism and sharpness into the process of preparing, making and executing business decisions.


But the industrialization confused the productions. One workstation became dependent on the pace, cycle, quality and decisions of preceding and succeeding work stations. Belt conveyors, ironer rates and CBW cycle times forced fixed, unyielding rates on the flow of goods, and conveyor lines forced fixed, unyielding sequences on the batch lots.

Decisions made in laundries with the new types of machines could not be reversed, and they even had to be made earlier and earlier on. New problems arose: bottle necks, lack of supplies, jamming of goods, nervous planning, allocation chaos, overrun deadlines, dependent consumptions and precedence constraints.

A new type of specialisation attempted to remedy this planning chaos: specialisation on market segments. One line for sheets, one for duvet covers, one for pillowcases etc. Entire laundries specialised on a single or very few articles, such as mat, flatwork and garment laundries. By concentrating on only a few products the number of planning variables were reduced, and the working day and the planning task were again almost manageable.

But in the process the laundries surrendered major parts of the market.


The suppliers
The suppliers followed suit. First in specialising on the laundry industry, and then on single sections of the laundry – wet room, finishing, garment handling. A fine-meshed network of small suppliers thinned out and left fewer and bigger ones. Which today is only a handful really big multinational suppliers, who in principle are able to deliver complete laundries fully equipped from check-in to dispatch department, with the key sitting in the door.

The global competition between suppliers heads the development in one definite direction, where no manufacturer is left alone by his competitors with an exclusive product, an exceptional quality or special solution. Development is a one-way alley that standardizes product ranges. Pressure on prices is increased, but differences are evened out.

Also differences between the laundries.


Price, price, price
Because with machines, equipment, textiles and chemicals coming from the same handful of suppliers, the differences between the services of the laundries have almost disappeared. Today it is not possible to tell whether a boiler suit comes from one laundry or the other. The laundries deliver standard products, in standard qualities.

All that is left is price and certainty of delivery. And deliveries just have to be on time.

Further specialisation and automation takes the total variable costs, and thus also the prices, down even further. But the production equipment is expensive. Demands large volumes. And since the production equipment is a fixed cost, which can neither be hired nor fired, the laundry needs large volumes all the time. The trade area must be increased and the demand must be strengthened, but all the laundry has left to do with is price.

The laundry must reduce prices even more, be aggressive, eat itself. Cannibalise. Even though the laundry has taken great effort in reducing costs, and surrendered flexibility as well as the majority of the competitive parameters, the pressure on costs is still high. Industrialisation never stops. In it there is a self-perpetuating automatic that makes it expand and spread like ripples across the water.


And forces the small independent laundries to fight big national companies. The big national companies are up against even bigger multinational groups. The multinational groups are under pressure from investors and shareholders, who, as alternative investment options, have other and more growth friendly industries to place their money in.

In the multinational and global society consequences spread, from abroad to home, and from the big to the small. In our western world, nobody can decline competition and demands on earnings.


Function and object
Earlier on the laundry’s function was also its object. With dirty laundry in the check-in and a waiting market on the other side of the dispatch department, the laundry’s function was: To prepare textiles for (re)use.

But the pressure on costs has changed the conditions. Industrialisation has made the costs of running small laundries, linked to a single consumer, too high, compared to the advantages of gathering and centralizing the laundering of textiles from a number of consumers in one place. The simple arithmetic logic, that more pieces to spread the write offs on, the better equipment one is allowed to invest in, has implied that the laundries have grown bigger and bigger, serving more and more customers.


To launder was no longer just a question of wearing clean clothes. It was also a question of economy on an industrial scale, to the customers as well as to the laundry owners.


The practical function, to launder, became a means to fulfil the economical object to reduce costs, and earn profits.


The impact of repetition
Even though washing may be the most important of the laundry processes, the issue of preparing textiles for reuse implies more than the washing process itself. And since industrial scale means:

•  Many pieces,

•  Many times,

•  Subject to economical constraints,

– all factors relating to the reuse of the textiles become important, also each step in the circulation between the customer and the laundry.

To deliver a product or a service that reduce the customers costs, not only on the laundering, but maybe also on cost drivers, that are not at first related to the laundry services, puts the laundry in a stronger competitive position. New possibilities surface. Rental care is just one, which has improved the laundry’s business economics and the customers liquidity, paid for by cost reductions on textile investments (by the textile supplier), by increases in the productivity (by the employees), and by reductions in the consumption of water (by the water supplier) and chemicals (by the chemical supplier).


The principle task of the laundry
But what was it that actually took place when the laundries started renting out textiles?

A principle (strategic) decision was made about expanding the business area. It was a sound and economically well based decision, but should the laundry in principle be occupied with renting?

If the answer to that question is yes, is there anything else the laundry should rent out? Flags, carpets, car seats? Or what about chairs?

How do we answer that sort of question?

Well, it depends on what market demands the laundry wants to fulfil – the most legitimate question of all. And each laundry answers by itself. There is no standard answer. But before you answer, it helps to ponder on the consequences – and to have a look at what others have done.


Horse-drawn carriages
In the century before last, before the car was invented, it was sensible and sound business practice to make horse-drawn carriages. If you asked the manufacturers what they were doing, they would answer: Making carriages, of course.

But time changed the market demands from carriages to cars, to put it very short. And if today we began to look for the companies that 150 years ago made carriages, we wouldn’t find many – if any at all. But why?

Because they made carriages, of course.

They focused on what they could make, instead of what the market was in need of. Had they instead produced vehicles, and in that way fulfilled a need for transportation means, the story could have ended very differently.

Then they would slowly, but surely have followed the market and its demands. It would have hurt, because they would have had to cannibalize their businesses. They would have had to let in motorized vehicles into their productions, scrap their knowledge of horses, use their competences in suspension, wheel- and chassis constructions, and complement with knowledge of combustion engines.

But today their enterprises would maybe have a size and economical weight their forebears would never have even dreamt of.

For the most part the difference lies in the way we regard our businesses. The rest comes from our ability to run the business from day-to-day – which I am writing about in the coming issues of Laundry & Cleaning News.


But why is it so important to identify the demand?

Because it is the only way to realize how the laundry best solves its tasks. There are no other ways to realize what to demand from the production, from the employees and from the suppliers. There is no better way of understanding why the laundry is doing well, or doing poorly, in the market.

It is only when the laundry has a deep and profound understanding of who the customer is, what her professional needs are, and how the laundry services fit into her working day, that we are able to tell a good solution from a bad, at good product from a bad, and a good machine from a bad.


Stupid question
Put yourself in your customers place. Look at the products and services your laundry provides. Search for things to do better. Ask stupid questions – such as:

Why do we fold the tablecloths?

Stupid question. Of course we fold the cloths.

But why? Is the question really that stupid?

No, it’s not. A billion dollar industry is based on the answer to that question, so it must be rather well founded, one should imagine.

Then, why do we fold the tablecloths? Do the folding marks add to the value of the cloth in use, do they look decorative on the table or do they make the table easier to set?

No, they don’t.

Then why are we making folding marks? Would it be possible to find another solution, a solution that still worked well in the laundry, but didn’t have the folding marks as a side effect? If we did – how would the new solution affect our competitive edge? What would happen to us, if our competitor introduced such a solution?

Well, maybe we should give it a second thought, and investigate the possibilities of making tablecloths free from folding marks. Our own habitual thinking has a tendency to judge such questions naive or downright stupid, but it is such breaks with habitual thinking that leads to development or maybe even a revolution that may push a business or an entire industry forward.

My point is, it is only when we understand who the customer is, and what her demands are, that we are able to see the laundry solutions from her perspective. It is only from her perspective that we can judge the quality of our solutions.

By the way – we fold the tablecloths to make them manageable when handling and storing, so the question should actually read: Is it possible to obtain the same handyness without the folding marks?

If there is a good, positive, economical answer to that question, it will inevitably shake the industry.


Decision areas
Today laundry production involves a number of complex decision areas. There is not just one type of problems to deal with, within one time frame. Outlining the decision areas schematically, gives the following picture:


For each area the laundry has to formulate a strategy being the basis of each and every decision made, hour-by-hour and day-by-day. And all decisions must point in the same direction.

Laundering has become a service industry that exists on the premises of fabrication. But with that it has also gained the possibility of applying modern, effective, industrial methods.