How to run a small plant

I received a call from a reader a few months ago.  Although she did not call for this reason, she submitted a very interesting request.  She liked the columns that I write but she asked for a column that was aimed at running small plants.  I loved this idea!  Not only because it deviates from my general thought process, but because there are a great number of small plants out there.  I am excited to be writing about this industry from the vantage point of a small-plant owner/operator.  It isn’t that I generally write from a big-plant owner’s perspective.  I don’t think that way.  I just generally write about things that are more task-specific.  But for today, let’s get out of the box and think about a small plant.  There are some very big operators in this country that have numerous package plants.  Although they are certainly not small businesses, nor small operators, the individual plants function as small businesses.  They will benefit from these philosophies as well.  

Let’s imagine a plant that does 1000 pieces per week.  Let’s start out by saying that this is 200 pieces per day, for 5 days.  I know that it’s not exactly that way, but we will start there.

The first and most important step, is to determine at what level of profitability you want to run your business.  That might seem like an odd question.  A good answer is “very.”  The irony is that many small plant owners don’t answer that question first, or at all.  They first fill the positions that they feel they obviously must need, and then they can’t understand why they can’t be more efficient.  The devil is in the design.

Let’s imagine that plant doing 1000 pieces per week; 500 shirts and 500 drycleaning pieces.  Let us start from the beginning and imagine that you have just acquired (or built) a new small plant that is doing start-up volume.   The first thought is that you need 4 employees, probably 5.  You need a drycleaner, a drycleaning presser, a shirt presser and a customer service person and a part-timer to cover night shift customer service.  You convince yourself that you are being efficient by utilizing the CSR to also do garment inspection and order assembly and bagging.

There are a number of thoughts regarding this methodology.  None are particularly exciting.  In order to be considered efficient, 1000 pieces requires 45 hours of production labor.  Yep!  That’s it.  Forty-five.  This does not count CSR labor, but it does count the labor needed to inspect, assemble and bag garments.  So, in your portrait of efficiency, half of a CSR’s labor, during production hours, must be charged to production.  It’s easy and perhaps tempting to lie to yourself here and not charge the labor to production here, but there is no advantage to a numbers game.  In a plant that does 1000 pieces, ideally you want to service those customers with 40 hours of labor.  That is a real challenge when you have a store that is open, say, 65 hours per week.  This is an easy trap to get caught in; blame it on volume.  You think “I would be more efficient if the pieces came in through the door.”  This is especially hazardous because you become certain that the only solution is getting more pieces.  This is not true.  And it’s even worse than that, because if the pieces do come, no one in the plant has ever been fully utilized – they have never been efficient by culture.  Therefore, more pieces will breed more labor hours rather than an improved utilization of the hours that you already are using.  This means that, by design, if you don’t know how to be efficient or profitable when you are small, volume will do you no good.  This is the hardest lesson to learn in this business.

One of your options is indeed to staff your plant with 3 ½ production employees (the half being the shared CSR).   The herculean task in that scenario is to get each of those employees to work no more than 13 hours per week and the shared employee to work 6 ½ in production.  Per week.  If that sounds like a nightmare, you are right.  It is.  For one thing, just the boiler start-up time can kill that plan.  Typically, your drycleaner comes in an hour before anyone else.  You don’t get to add that to the total number of hours that you can use.  Those are production hours and they count.  Mathematically, this is simple arithmetic.  500 drycleaning pieces is 15 hours of pressing time.  500 shirts represent 12 hours of pressing time.  Loading, unloading and operating a drycleaning machine, along with hanging garments and spotting can easily be done in the 12 hours that remain.  This is a total of 39 production hours, aside from the inspection, assembly & bagging (IAB) hours. 

There are so many problems with this that even if you thought this out in the past, you likely dismissed it as implausible, impractical or impossible.  Here are just some of the obstacles that get in the way of making this a reality:

• Getting someone to come in to work and putting in a work day that averages less than 3 hours per day is very unlikely.  Finding 3 is incomprehensible.
• Pressing 33 drycleaning pieces per hour, on average is rare enough when there is a full work load.  There is no chance when pressing at that rate means that the presser will be done in 3 hours.
• 500 shirts in a week is, realistically, 10 hours per week.  I allowed 30% more than that, but still, most plants doing 500 shirts per week spend more than 13 hours pressing them.
• The drycleaner comes in an hour early to turn on the boiler and start a washer load of shirts and then a half hour later puts in the first drycleaning load.  He would press if he could, but there are no pieces to press.  There is a bare minimum of 5 “wasted” hours per week.  Having this person work only 13 hours per week is impossible.  Hmmm.
• If you have a 60# machine and can manage 50 pieces per hour out of it, you will run 10 loads per week; 2 per day.  If this works out that way, you have hit the lottery.  If this happens every day, you are cheating somewhere.  Most days, you will run four loads and half of them will be short loads.  This automatically requires your drycleaner to be around an absolute minimum of 5 hours per day.  He would have more than double my allotment.    
• If you put this guy on salary, which, thanks to a new federal law, has become much more impractical and costly, his hours will not come under such scrutiny but that is smoke and mirrors.  This is because his salary will reflect a 40-hour workweek.  I doubt that you will get someone to work 40 hours for a paycheck that reflects what this industry accepts as 13 hours of work.  We haven’t discussed payroll cost as a percentage of gross revenue, so let’s look at that for a minute.  1000 pieces is around $5000 per week in gross sales.  If your average burdened hourly rate is $12 and you use 100 hours of labor, your payroll is $1200 per week.  This is 24%; excellent.  So why are you floored as you read that?  Because you are probably not that efficient and are under-utilizing your labor.  Very often, this is culturally inbred, which makes is a real challenge to fix.  That fact doesn’t make me wrong, however.  You make the situation even more difficult to remedy when you pay someone a 40-hour salary and still need 2 ½ others to complete the job.  Assuming for a minute that the other 2 ½ people are rock stars and work precisely 32 hours combined, you are still paying for the equivalent of 72 hours, plus CSR time and your labor cost in 30%, a 25% increase.  If the other employees work at a more typical pace, your labor is pushing 50%.  Does that sound familiar?
• Even with the scenario that has your labor up a mere 25% higher than it should be (with the salaried drycleaner), throwing away 25% is throwing away all of your profit.  You didn’t expect to make much more than 25% net profit did you?  That simple mistake cost you all of your profit.  This business, in case you haven’t realized it yet, is no fun if you aren’t making money.

So, have I spun a tale of doom?  Not at all.  The trick is simply to budget your hours and be certain that every sub-department is very efficient.  Believe in it and stick to it.  One of my favorite people in the industry once described me as the guy that reduced this business to a simple math formula.   He was referring to this:  If you want to run your drycleaning plant at 18 pieces per labor hour – a lofty but wholly attainable goal – and you do 1800 pieces, you get to use 100 labor hours.  If that is 1800 pieces per week, you must do everything with 100 hours of labor.  That means cleaning, spotting, hanging, pressing, inspection, assembly, bagging, scanning, whatever – all in 100 hours.  That can be any combination of people and hours; 4 employees working 25 hours, 2 people working 50, 3 working 33.3.  Or any of the other combinations that are mathematically possible.  In the shirt department, a good goal is to do 28 pieces per labor hour.  Again, it’s a lofty goal.  If you are like most people, you are running your drycleaning department at 12 and your shirt department at 18.  That is where all of your profit is hidden.  This is true for large plants and it is true for small plants.  My best guess as to why it is universal is because all plants are down a similar percentage of pieces.  Let’s say that this percentage is 50% over the past 20 years.  In most cases, your plant was running 40 hours a week then, and it is still running 40 hours per week now.  And the number of employees back then was less than double what it is now.  Everybody is far less efficient now than they were once were.

So how many pieces do you do in an average week?  There are as many answers to that question as there are plants.  I will be happy to put together a plan for you if you contact me personally, but let’s play out a couple of hypotheticals.  Let’s talk about drycleaning pieces only, for now.

• Weekly pieces: 1500
• Piece Per Labor Hour (PPLH) goal:  18
• Budgeted number of total hours (1500/18): 83

What you need:  1 fulltime (40 hours) hourly employee that is fully qualified as a presser, spotter and drycleaner.  It’s even better if he has mechanical skills.  One part-time presser and one shared CSR and IAB person.  The drycleaner can be “guaranteed” 40 hours, but if so, it is at the expense of the other employees.  This means that it is not a salary, per se, but if he can press, the designated presser is released and the drycleaner/presser takes over.  That’s the deal.

Let’s assume a 60# GreenEarth machine with a 60 min cycle.  50 pieces per hour capacity. A dedicated wetcleaning machine with a 50# capacity and, with dry time, 35 pieces per hour.  We will call this the average day of 300 pieces

The day goes like this:

Time	Employee	Pieces Cleaned	Pieces pressed	Hours this period	Cumm. Hours Used	Notes	PPLH
6am-7am	Drycleaner	15 (from the previous day)	0	1	1	Boiler turned on, 1st & 2nd load classified & pre-spotted, perhaps more.  Wetclean load started.  DC machine started by 6:30 am.  This means that as soon as one load is weighed out, it goes into the machine awaiting steam pressure	0
7-7:30	Drycleaner	0	15	1	1.5	At 7, the drycleaner becomes the presser and presses the 15 pieces left from the previous day.	15/1.5= 10 (yuck)
7:30-7:40	Drycleaner	50 (day total-50)		.17	1.67	The drycleaner unloads the cleaning machine (+50) and transfer the wetcleaning to the dryer.  He starts the next DC load.
7:40-8:00	Drycleaner	40	10	.33	2	The drycleaner has 20 minutes to press and must do 10 pieces in that time	25/2= 12.5 (yuck)
8-8:30	Drycleaner	25	15	.5	2.5	The drycleaner has 30 minutes to press and must do 15 pieces in that time	40/2.5= 16 (Hmm)
8:30-9	Drycleaner	100 (day total-135)	0	.5	3	Dryer is unloaded (+35 pcs) and DC machine unloaded (+50 pcs).  DC machine loaded with 3rd load. May have time for some spotting).  35 more wetcleaning pieces and started.	40/3= 13.3 (gulp)
9-10	Drycleaner Presser & IAB	35	65	2.5	5.5	The drycleaner and the presser combine to press 65 pieces the IAB person is shared with customer service.  This is the 1st full production hour.  The machines are all running and the presses are too.	105/5.5= 19
10-10:15	Drycleaner Presser & IAB	35	0	.75	6.25	Staff break	105/6.25= 16.8
10:15-11:00	Drycleaner Presser & IAB	85 (day total-220)	35	2.25	9	Drycleaning machine and dryer are both emptied adding 85 pieces to press. Cleaner is busy w/ various tasks inc. starting the DC machine @ 10:30. No more wet-cleaning.	140/9 = 15.5
11-12	Drycleaner Presser & IAB	20	65	2.5	11.5	The drycleaner and the presser combine to press 65 pieces the IAB person is shared with customer service. It is mandatory that IAB is very efficient.  It may be difficult to inspect, assemble and bag 65 garments per hour with some systems, but with Tailwind, for example, this is very easy	205/11.5= 17.8
12-12:30	Drycleaner Presser & IAB	20 (day total-220)		0	11.5	Staff lunch break.  Unpaid	205/11.5= 17.8
12:30-1:00	Drycleaner Presser & IAB	63 (day total-270)	17	1.25	12.75	The drycleaner unloads the DC machine (+50 pcs) and restarts it with the last 40 pieces and perhaps some do-overs.  The presser presses for the half hour and does 17 pcs.	222/12.75= 17.4
1:00-1:45	Drycleaner Presser & IAB	53 (day total-300)	40	1.88	14.63	The drycleaner unloads the machine (+30) and performs the maintenance ritual.  Productivity suffers a bit due to this.  The drycleaner clocks out at 1:45.  He has worked 7.25 hours.	265/14.63= 18.1
1:45-2:45	Presser & IAB	17 (left for next day	35	1.5	16.13	The press takes 45 mins to press 25 pieces.  She must leave 15 for the next day so that this can be repeated tomorrow.	300/16.13= 18.6 We could have wasted ½ and still made budget.

IAB must remain 100% “caught up” all day.  That isn’t as difficult as you might think.  If there is still work to be done after all of the pressing is done, you will be using labor hours with no pieces produced.  That is ZERO pieces per labor hour. 

There is no way for me to tell if this is similar to your plant, but the volume is similar to many small plants.  I bet the labor isn’t though.  But this is how it’s done.  The plant that I’ve just described is a real-life plant that I have worked at many times.  It isn’t fictitious.  But there are smaller plants too.  Suppose you have a plant that does 200 pieces per day, including shirts?  With a common assembly area.  This is not difficult, but if you start with more than one production employee, you are on a train wreck waiting to happen.  If you combine shirts and drycleaning into a common IAB area, you will need to combine the targeted PPLH (18 for DC, 28 for shirts).  Assuming a 50/50, your targeted PPLH would be 23.  That means that you get to spend 8.7 hours to produce 200 pieces.  Do you think that you won’t meet service schedules if your plant runs 9 hours?  This is not any issue.  Remember that the CSR at the store is a shared production person.  This means that the drycleaner/presser/shirt presser works 6 hours and the IAB person is shared 3 hours/3 hours with customer service and IAB.  Is this possible?  It is brutal, I promise that, but pressing 100 shirts is 2 hours of labor and 100 DC pieces takes 3 hours.  This becomes very plausible when the IAB/CSR person is ready, willing and able to hang loads and generally keep things moving.  When that person isn’t afraid to jump on a press and press lower-skill items like sweaters, ties, etc. then you can really do well with this format.  But remember that you have to start this transition to a super-efficient machine with an open mind and a new outlook.  Out with the old, in with the new. 

You might think that these ideas do not apply to you and you might be right.  Every plant is different, but they all deserve to run profitably and there is a way to attain extraordinary productivity numbers.  If your pieces per labor hour statistics are not like the targets that I’ve mentioned, then there is room for improvement.  Do not adopt the philosophy that your plant sacrifices good productivity for better quality.  This is a cop out.  Every pressing productivity goal mentioned here is lower than DLI own targets for pressing productivity and good quality is always a prerequisite..  This is not because I disagree with the DLI goals at all.  It means that I am showing you that you can attain excellent productivity numbers and still have room to improve.  Contact me if you need ideas for your plant.