et’s imagine
that you have a shirt laundry with a double-buck unit and you
do 3,500 shirts per week. In that mix of shirts, you do about
145 “hand-finish” shirts, 275 pull-over knit shirts
and 185 blouses and shirts that are too small for the shirt
unit.
So, out of 3,500 shirts per week, about
600 of them never actually get to the shirt unit. With me so
far?
You have a hot-head area for this
so-called “junk.” In that area, you have an active,
motivated employee that works 40 hours per week to do these odd
pieces. Arguably, this employee produces
15 quality pieces per hour (600 pieces
divided by 40 hours).
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Universally, this department is a loser.
Your two shirt pressers collectively are producing roughly 90
shirts per hour.
At the $2 per shirt that you charge, your
shirt unit produces $90 worth of saleable service each and
every labor hour.
In order to get that from your hot-head
area, manned by one person, you would need to charge an average
of $6 for each of the pieces - the knits, the small shirts, the
blouses, the hand-finish. I doubt it.
Mostly likely the knits and the small
shirts have little or no mark-up over regular shirts, but even
if they do, it probably isn’t 300 percent. We are often
afraid to charge more for blouses, given the history of legal
issues related to that. So often there is no upcharge for them.
And as for hand-finish, there are some
people who have no upcharge for that either, but I have seen
600 percent premium for this service. Anyway, my point remains;
there is little money to be made in the hot-head area.
Let’s assume that the average price
is $3 each divided up like this:
145 hand-finish shirts @ $3.50 each =
$507.50.
275 knit pull-overs (no-mark-up) @ $2.00 =
$550.00.
185 blouses @ (OK, let’s say that
you do mark them up) $3.00 each = $555.00.
That’s total gross revenue of
$1,612.50 for 605 pieces, an average of $2.66 each. Oops! Okay,
let’s say your prices are higher than that and the
average is like I said: $3.
Something good happens. Then what?
That department has long been your nemesis
and you have merely accepted it as part of the business. Then
something good happens. My point today will be to make sure
that you don’t allow the occurrence of something good to
turn into something bad, so you will need to follow along
closely.
The good thing that happens is this: You
read a recommendation from someone like me (or in this case,
me) saying that any shirt launderer who has a large amount of
odd items, like blouses, knit shirts or small shirts that need
to be done on a hot-head, will save substantial payroll dollars
by investing in one of those form-finisher tensioning shirt
units that are now widely available.
Let’s assume that you consider 25
pieces per hour from that unit uncontested. Let’s assume
that the equipment rep has completely captivated you. Frankly,
you’re thrilled that someone is not only sympathetic to
your plight in that dreaded hot-head area, but this someone is
actually presenting a plausible, worthwhile and affordable
solution to it.
Why am I making so many assumptions?
Because the point of this column isn’t to recommend this
tensioning equipment for higher volume shirt laundries.
The fact that I do recommend them is
merely a peripheral benefit. The point that I am leading up to
is what happens once you get it in the plant.
Are you still with me?
So you buy a supplemental tensioning shirt
unit. This is such a good buy that the up front cost is
immaterial. $10,000? $20,000? What’s the difference?
The reality is that instead of doing 600
pieces in 40 hours, your hot-head presser will now be able to
produce 1,000 pieces in the same time. 400 extra pieces @ $3
each = $1,200 per week.
With this new $1,200 per week —
$5,000 per month — you are sure to be in for some smooth
sailing. (Maybe even on your new sailboat!)
Are you following this? Let’s recap
to make sure:
• You are currently doing odd items
in your hot-head area at the rate of 15 pieces per hour.
• You charge an average of $3 for
each of these garments.
• The tensioning type shirt unit that
you buy, at the usual retail price, does 25 shirts per hour
(they may do more or less, but for the purpose of my point,
let’s say that 25 shirts per hour is, as I said earlier,
uncontested.)
• Because you will now be capable of
doing 10 additional pieces per hour for 40 hours per week, you
will be able to produce 400 additional pieces per week.
• This equates to $1,200 per week or
about $5,000 per month when charging an average of $3 per
piece.
Is there anything wrong with these facts
and figures? No.
Just to illustrate that my point has
nothing to do with tensioning equipment per se, but rather is
actually quite generic, I’ll go off on a tangent for a
minute with two other examples: You could upgrade your old
clunky shirt unit that is capable of no more than 40 shirts per
hour to another that can easily do 50 shirts. A 25 percent
increase in productivity! Instead of doing 2,000 shirts, you
can do 2,500 shirts in the same amount of time.
Another example
You can drastically increase the
productivity of your pants presser. How about an increase of 50
to 100 percent? I saw these presses in Japan that rather easily
process 60 pants per hour.
(Go to my Japan Clean Show website:
www.tailwindshirts.com/japan.html to see movies of this for
yourself.) You could do two times as many pants without any
increase in labor. This is incontestable.
So what is my point? What is the problem?
The problem is that we pray that the
equipment that we buy will manage our business. We buy a shirt
unit that we see pressing perfect shirts at the show. We pray
that we, too, will get 100 percent perfect shirts with the same
unit at our plant.
I assure you that this will never happen.
When we buy that tensioning unit, the math that we do is
correct, but there is logic absent.
Can you press 1,000 shirts in the same
time that you could previously press 600? Of course! Will you
save $5,000 per month? Of course not! Will you get the $5,000
per month windfall?
Extraordinarily doubtful. Will getting
this tensioning unit save you money?
Uh… it is absolutely within the
window of “possible.” (How’s that for
carefully worded?)
Ok, I’ll quit mincing words. You
will be able to do 1,000 shirts in the 40 hours during which
you could have previously pressed a mere 600, but from where
will the 400 “extra” shirts come?
They won’t come. This is not the
“Field of Dreams.” Do not adopt its premise. You
will not press 400 more shirts at all, you only have that
potential. And that potential dissipates with time.
So do you stand to save money by
supplementing the equipment in your hot-head area? Still, the
answer is “possible.” But it must be managed.
The equipment will not manage your plant
or your work flow. You must do that. You do not stand to
improve your cash flow by $5,000. You stand to save about $160
per week.
Big disappointment
Disappointed? Well, you should be if you
were thinking $1,200 per week.
Let’s estimate a lease payment on
your tensioning shirt unit at $360. Subtract that cost from the
weekly labor savings and you’ll experience a net savings
of about $340 monthly. There is nothing wrong with that. That
is real dollar savings that you spend on yourself.
But if you bought the unit at a trade show
with the “more-common-than-you-may-think” thought
of increasing sales $5,000 — or saving $5,000 — you
will find yourself somewhere between very disappointed and
livid.
But with whom will you be perturbed? No
one has lied to you, or even misled you. You simply let
quasi-facts entice you.
A year later, you may wonder why you ever
bought that thing because your $160 per week payroll savings
will soon evaporate if you remain ill-advised.
Let’s continue with our imaginary
plant that I described earlier. Betty is the lady that works in
the hot-head area.
She conscientiously works 7 to 3, five
days a week. She makes $9 per hour and you incur payroll taxes
and other expenses that leave her costing you $10 per hour. Her
$330 per week take-home pay is important to her family.
Enter the new tensioning shirt unit on
which she easily does 25 pieces per hour. Now she works 24
hours per week — or does she?
Therein lies the problem. You, as the
manager, and perhaps the one on the hook for a $360 lease
payment, have four choices:
1. Send Betty
home when she’s done her day’s work while
continually monitoring her productivity so that you are
continually assured that she is getting that all important 25
pieces per hour.
2. Send Betty
home when she’s done her days work but pay her for a full
day anyway.
3. When Betty
is done pressing her miscellaneous items, you give her
something else to do so that she still gets her 40 hours. If
her hours were to be cut, she would quit.
4. Let Betty do
what she wants by ignoring her and her department with the
belief that she does 25 pieces per hour now rather than 15.
Only one of these options will save you
the three hundred and something dollars that we talked about,
and that is option one.
How to cut labor costs
The only way to cut labor is to
continually monitor an employee’s productivity and then
send them home (without pay) when the day’s work is done.
Sound gross? Well maybe, but it is the
truth.
If you send Betty home, but still pay her,
you will save no money at all. She may think that you’re
wonderful, but I don’t think that this was the goal.
If you give Betty something else to do,
you may not be as nice a guy, and you may not save any money
either. The only way that you would save actual cash dollars is
if Betty happens to become available just in time for you to
have a vacancy somewhere else, like perhaps the front counter.
Otherwise she contributes to overstaffing.
She may look busy, but there is a good
chance that what she is doing has been done by others
previously. For instance, she “helps” to mark in.
No one goes home earlier, but now you have
three people marking in instead of two.
Giving employees “something else to
do” is counter productive to cutting labor cost, a direct
cause of plant overstaffing and it is kind of a company
endorsement for “padding the time clock.” These are
really bad things. If you send Betty home but still pay her,
there may be minuscule, theoretical savings somewhere in there,
but I doubt they will make your lease payment.
Please note that the operative words are
may, minuscule and theoretical. That would happen if Betty
finishing her stuff earlier would mean that the inspection and
assembly department could finish earlier — assuming of
course they had previously been waiting on hot-head items in
the past and not longer do so.
So what happens in the real world? Option
4 happens in the real world.
Betty runs her own department and
management is oblivious. She finishes early on the days she
wants to get out early (proving to one and all that she —
and the equipment — does 25 pieces per hour) but pads the
time clock during the days and weeks that she needs 40 hours.
Is Betty to blame? No, management is to
blame. Management allows it to happen. In order to save payroll
dollars, management must cut labor hours, not redistribute
them.
Furthermore, management must always
monitor productivity. Always. I always say that because it is
always true. Don’t expect what you don’t inspect.
My management mentor used to say that all
the time 20 years ago. It’s true.
The ideal situation
Some of us will be in an ideal situation.
Some of us will have two people in the hot-head area, for
example, both working 34 hours per week, doing a total of 1,000
pieces. Acquisition of a tensioning shirt unit gives one person
a 40-hour per week job. One employee cut, $1,000 per month net
savings, month after month.
That is neat and tidy and it keeps us from
having to manage our employees, which is delicious. The
remaining presser may motivate herself because she
doesn’t desire a 10- to 12-hour day.
Bottom line is that this situation will
surely be the exception. But it often makes us think that the
investments are only for the “big guys.”
This is sad and untrue. If your payroll is
$3,000 a week, the prospect of saving $340 a month is
appealing, but saving $1,000 per month is what you’re
really looking for. You’re perhaps saving your pennies
for an investment that will save you that much.
You may wait forever. If you covet the guy
that saves $1,000 per month, consider that if he’s doing
1,000 hot-head pieces a week, he may be at the volume level
that breeds a payroll of $50,000 per month.
Proportionately speaking, his savings pale
in comparison to yours.
Betty expects 40 hours per week because
that is what she has been allowed to expect. She isn’t
wrong to expect that, but the drycleaning and laundry business
rarely makes for neat and tidy eight hour days and 40 hour
weeks.
Getting your employees to understand that
should be your New Year’s resolution.
So what to do?
How about an employee meeting during which
you explain your dilemma? Follow that up with a new rule for
yourself regarding new hires: “How many hours will I be
getting, Mr. Boss?”
You reply, “I’m not sure. Here
we don’t have set quitting times. We work until our job
is done while meeting certain goals. As a pants presser,
you’ll be expected to press 33 pants per hour, then when
you’re done and will be free to leave after checking with
the manager on duty. Some weeks that will yield 25 hours.
During other weeks you will work 40 or more hours.”
Do you think that you can pull that off?
It’s not hard, and it gets the momentum swinging in the
right direction.
You may think that you can’t do
that. You may think that you are desperate for a pants presser
(to continue with the same example) and I’m sure that
they may be in short supply. So you give them what they need
— 40 hours guaranteed.
OK, but consider this: Visualize two
equally qualified, motivated and available shirt pressers (or
whatever). One wants $15 per hour, the other, $24. Seems
logical that you would choose the one that only wants $15,
right?
But if this employee is not managed
— that is, goals set, monitored and maintained —
and presses 15 hot-head pieces per hour instead of the standard
25, he or she is working at the rate of $24 per hour. $24 per
hour is a rate that you never would have considered paying, but
you are allowing it to happen by paying a 40-hour wage ($15 x
40 hours = $600) for 25 hours worth of work ($15 x 25 hours =
$375).
If you pay $600 for 25 hours worth of
work, even if it takes 40 hours to produce, you are paying at
the rate of $24.
That is the cost of not monitoring your
productivity.
Donald Desrosiers has been in the
shirt laundering business since 1978 and is a work-flow systems
engineer who provides services to shirt launderers through
Tailwind Shirt Systems, 867 Spencer St., Fall River, MA. He can
be reached by phone at (508) 965-3163 or by e-mail at tailwind1@attbi.com
and he has a web sites located
at: www.tailwindshirts.com and www.dondesrosiers.com
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