For many years, textile rental was charged based on stock and minimum usage. Stock investment and return on textiles was much clearer and the customer had a vested interest in minimising their stock holding. This system also prioritised stock counting.
Today, launderers take all the risk by charging mostly for delivery only. Let us remind ourselves of the definition of textile rental – we provide hygienically cleaned used textiles on a rental basis.
In the current environment, our service is more relevant and essential than ever. Keeping stock levels tight and regularly cleaned and turned over is good for everyone. It is an excellent opportunity to review aspects of our business and reconfigure them.
One cycle that must be broken is the over-ordering of stock by customers. It can be a challenge to take a customer from over-ordering on an irregular basis, to a set service frequency with normal variation in order quantities.
Textiles are a scarce and valuable resource and should only be dispatched based on actual demand. The issues associated with over-ordering include:
- Stock shortages for other customers
- Inefficient processing to meet ‘urgent’ orders
- Product and service quality deterioration
- Increased opportunity for pilferage and mistreatment of textiles
- Lost revenue from idle textiles
- Blowout on textile costs
Billing systems must be included in this discussion. Some common charging or billing methods and their strengths and weaknesses include:
Presentation only/delivered quantity/usage only
This essentially focuses on usage of textiles, with no concerns for stock level. It requires no soil counting and allows the total textile rental cost to flex with the customer’s demand.
The benefit to this model is that is comprises two elements – the first being a rental charge on total stock quantity and the second being a wash or process charge. It provides the textile rental company with an assured return over the contract period and requires soil counts.
Set stock-Auto return/Agreed Amount/Imprest
This method may be used as a complement to a lease method. It requires a soil count and minimum usage charges can be included, along with a charge for all items used from an agreed level.
Expected Pick Up Minimum
This method is based upon an agreed weekly usage based on total stock issue. There is an assured return for the textile rental company, with all items over the minimum amount charged additionally, and soil counts required.
The above methods (with the exception of the first) all present considerable benefits to the textile rental company, as well as to the customer. Stock is well turned, tracked and billed on a regular and predictable basis.
Some stock loss may be inevitable but regular tracking helps to minimise it. While identifiable loss should be paid by the customer, it should be a last resort and parameters for such set out in service agreements. Compensation for loss can be cause for friction within the business relationship between provider and customer.
Bundle provides technology and support for textile rental companies looking to improve their business performance. Contact Bundle, for more information.