2006-2007
Healthcare Textile Care Processing and Distribution Benchmarking Cost Review
By Ken Tyler

As various levels of internal management continue to complicate and re-engineer laundry operational cost scenarios, it is apparent that laundry and facility managers require a revised cost benchmarking rule of thumb that will assist them in marketing their operations.  For example, justification for new systems, new product reviews, a new facility, obtaining new customers and probably the most important, comparing variable cost which should reflect decisions to continue in house operations or to examine the parables of outsourcing management, operations, linen rental and transportation.  It is quite apparent that large laundry and linen rental consortiums that deal specifically with healthcare and hospitality markets are becoming more competitive as business trends escalate.

A review of numerous healthcare and hospitality laundry facilities located world wide with variable degrees of efficiency reveal the following benchmark costs that are deemed most efficient on the average, even though each and every facility demonstrates opportunities to reduce cost especially in labor sensitive areas.  Most important were the plans to reduce labor and utility cost related to washing, drying, conveyance, flatwork feeding and finishing.  These facilities also reported that major efforts were in the process to reduce textile replacement cost through standardization efforts and by examining best value over lowest cost for an item. 

Other major components under review seem to drive at lowering chemical cost by conducting actual comparisons and focusing on the customer service element that is so critical to this facet of the operation.  As mentioned in this report the cost to operate a laundry facility has dramatically increased due to many factors, primarily energy costs and fringe benefit costs.

These cost are reflective of actual cost, not estimates, not wishful thinking but real cost.  The key here is bring into reality what real laundry operational cost are, they are real cost that impact customers, clients and institutions that support these operations.  The days of processing textiles at .30 cents a pound have been gone for many years, assuming they were ever really around, hopefully this review will drive managers to fully examine all cost associated with their operation.

With the exception of labor costs, it is important to note that geographic trends in cost that appeared obvious in previous reports seem to have less impact in this reporting segment, i.e. variance in cost were level in most geographic locations which seems to indicate the broad range of the increase in fuel and fueled based operational segments i.e. no matter where you live it’s getting more and more expensive to operate a laundry.

Processing Cost: 
Direct labor costs including fringe benefits that are applicable to the receipt, sorting, washing, drying, ironing, conveyance and preparing textiles for delivery within a laundry processing facility. 
.19-.23 cents per pound processed. 
Increased from 2006-2007.

Administrative Cost: 
Laundry, Linen Management, Secretarial, contracting administration, general foreman and non-production employees/housekeeping.
.04-.07 cents per pound processed and delivered. 
Increase from previous report.

Maintenance and Repair Cost:   
Processing and ancillary support equipment, carts etc.:  Labor cost and materials associated with routine maintenance of applicable systems: 
.05-.08 cents per pound of laundry processed and delivered. 
Increase from previous report.  This could over the long term cause major difficulties as this key ingredient continues to receive less attention than may be required.  Contracting maintenance is on the rise..