Common misconception about equipment

Let’s imagine that you have a shirt laundry with a double-buck unit and you do 3500 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 3500 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.  Arguable, this employee produces 15 quality pieces per hour (600 pieces divided by 40 hours).  Universally, this department is a loser.  Your 2 shirt pressers collectively are producing roughly 90 shirts per hour.  At the $2.00 per shirt that you charge, your shirt unit produces $90 worth of sellable 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%.  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 that have no upcharge for that either, but I have seen 600% 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 there 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 $1612.50 for 605 pieces – an average of $2.66 each.  Opps!  Okay, let’s say your prices are higher than that and the average is like I said: $3.

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) say that any shirt launderer that 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 upfront 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 1000 pieces in the same time.  400 extra pieces @ $3.00 each; $1200 per week.  With this new $1200 per week – $5000 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 $1200 per week or about $5000 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% increase in productivity!  Instead of doing 2000 shirts, you can do 2500 shirts in the same amount of time.  Another example:  You can drastically increase the productivity of your pants presser.  How about an increase of 50-100%?  I saw these presses in Japan that rather easily process 60 pants per hour. You could do 2 times as many pants without any increase in labor.  This is uncontestable.

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% 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 1000 shirts in the same time that you could previously press 600?  Of course!  Will you save $5000 per month?  Of course not!  Will you get the $5000 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 1000 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 $5000.  You stand to save about $160 per week.  Disappointed?  Well, you should be if you were thinking $1200 per week.  Let’s estimate a lease payment on your tensioning shirt unit at $360.  Subtract that cost from the weekly labor savings (16 hours at $10) and you’ll experience a net savings of about $340 monthly – substantially less than $100 per week.  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 $5000 – or saving $5000 – 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 7-3, 5 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 days work while continually monitoring her productivity so that you are continually assured that she is getting those 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.  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 3 people marking in instead of 2.  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 miniscule, theoretical savings somewhere in there, but I doubt they will make your lease payment.  Please note that the operative words are may, miniscule & 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 still true.

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 1000 pieces.  Acquisition of a tensioning shirt unit gives one person a 40 hour per week job.  One employee cut, $1000 per month net savings, month after month.  That is neat & 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 10-12 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 $3000 a week, the prospect of saving $340 a month is appealing, but saving $1000 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 $1000 per month, consider that if he’s doing 1000 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/she is working at the rate of $24 per hour because this person is taking 40 hours to do 25 hours worth of work.  $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 hrs = $600) for 25 hours worth of work ($15 x 25 hours = $375).  If you pay $600 for 25 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.

If you do want you’ve always done, you’ll get what you always got.

Tailwind Shirt Systems – More for less – more productivity with less labor

To learn more visit www.tailwindshirts.com