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Important Tips to Consider for Entrepreneurs in Crisis

Important Tips to Consider for Entrepreneurs in Crisis, bankruptcy, crisis

A strong management team is needed, especially in turbulent times. Managers who know how to navigate the storm with confidence while making calm and clear decisions.

I have been through some pretty big storms in my own life (insolvency of a family business with over 1,000 employees and personal liabilities in the millions).

The following advice has helped me a lot and I am constantly trying to adhere to these standards.

Aligned with the mantra "If you're in a hurry, go slowly" (Lothar M. Seiwert), it's crucial to maintain composure and focus during crisis situations.

Watch this video to discover the 3 things you should never compromise in times of crisis.

The video to the blog:

Reduce distractions

First of all, it's important what you don't do and what you don't feed your brain with. This creates a lot of space!

Even in normal times, the laundry can offer an incredible number of distractions and you are also overwhelmed from outside.

Therefore:

  • Delete all distracting apps on your smartphone, especially social media and email. (FB, LinkedIn, YouTube, ...)
  • Deactivate all notifications on the PC and smartphone.
  • No more than 3 tabs in the browser or programs open at the same time.
  • Only listen to the news once a day.
  • Define 2-3 reliable news sources.
  • Check emails only every 2-3 hours, even during the crisis.
  • Divert the phone or set it to silent mode.

While some aspects may seem exaggerated, the situation and associated responsibilities are far from ordinary.

You might even offend your friends if you only read the WhatsApp message on your cell phone four days later. But you can't please everyone. In our case, my wife and my assistant have taken it upon themselves to make sure that nothing gets out of hand in the family or in the company.

Take care of yourself!

With every entrepreneur crisis, my sister always reminds me that the things most important during such a time is health, the relationships that I have built and having no legal or criminal problems to deal with.

With this perspective in mind:

  • Absolutely no alcohol! No psychotropic drugs!
  • Sufficient sleep - we are most productive with 7-8 hours of sleep.
  • Healthy eating
  • Sport
  • One day a week "off" - best to maintain relationships with family members
  • Consciously cultivate the most important relationships.
  • "Tell the truth - or at least don't lie" (Jordan Peterson) - if one does not have to deal with any legal affairs, it improves the quality and quantity of sleep immensely.
  • Block out any negative energy and people. Always strive for positivity!
  • In general, do not do anything with evil intent!

It would be best to discuss these measures with your partner and/or assistant and then act on them. The boss’ health is of the utmost importance for everyone involved.

Clear Priorities That Should Be Written Down and Enforced

Max. 7 tasks, better 3-5 on which you can really concentrate and also complete in the short term.

  • The subject areas of the Workers/ Authorities/ Customers/ Suppliers/ Liquidity should always be colorfully assessed in writing (Green / Yellow / Red) and measures should be compartmentalized. When something is “green,” no action should be taken. By “red” however, the action is high priority and “yellow „stands for measures that are often delegated. This task takes only five minutes and creates overview.
  • Goals for the following week should be written down on Sunday.
  • Set daily goals (max. 3) in writing the evening before, estimate how long you need and plan your appointments accordingly.
  • The key forces should keep in touch and delegate things verbally as well as through writing.
  • Work through your own tasks in a consistent and structured manner.

... and then demand the same from employees.

These are trivial things, but they are essential for a high level of effectiveness! Written form and good communication with the team are particularly important here. For example, a daily ten-minute meeting pointing out issues and how to eradicate and/or improve them.

MUCH SUCCESS!


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Uncategorized

Optimizing Uniform Distribution in Nursing Homes – A Strategic Logistics Analysis

Optimizing Uniform Distribution in Nursing Homes , workwear for healthcare staff, nursing home workwear, industrial workwear laundry services, healthcare industry workwear, laundry automation systems

There are many different systems for providing nursing staff with workwear, and new options are currently being established. This article aims to describe all variants and explain the pros and cons. It also discusses trends in workwear, and cost-effectiveness.
  
The author has followed and helped shape developments in the field of textile supply for nursing homes over the last 35 years and has been responsible for supplying over 250 retirement homes with textile rental services.

This article is therefore a comprehensive summary - aiming to be as neutral as possible.

For those who want to read crosswise, we recommend reading the table of contents as well as the summary at the end.

Uniform systems in nursing homes

  • The nursing staff washes their workwear themselves
  • The nursing home washes the workwear for its employees in its own laundry
  • The nursing home buys the workwear and outsources the washing to a contract laundry.
  • A rental launderer delivers personal workwear with or without a wardrobe service
  • Pool clothing with open shelves
  • Pool clothing with automatic dispenser and RFID UHF technology.

Trends in workwear for nursing homes

Several new trends have emerged in the last 5-10 years

Differentiation between nursing homes and hospitals

A nursing home is not a hospital! This is a trivial statement, but it also has an impact on the workwear. A nursing home aims to enable a dignified old age; the aim of a hospital i diagnose and treat an illness as quickly as possible.
Workwear in a nursing home is a way of portraying the atmosphere and spirit of the of the nursing home. Often the uniforms are more causal then in a hosptial setting.

Increasing demands on hygiene in nursing homes

Hygiene regulations in care homes have become much stricter since COVID-19. Moreover, after the pandemic is before the next pandemic. It is therefore important to learn from that situation.

Irrespective of this, hygiene is challenged by increased antibiotic resistance and stricter legal and regulatory requirements.

Specific guidelines:

  • Washing with a disinfectant process that is both bactericidal and virucidal
  • Providing protective aprons, protective equipment for infectious residents or in a pandemic.

Recommendations of the author:

  • Sufficient reusable protective equipment, as this ensures better supply in case of an outbreak. It is to be expected that the next pandemic will also lead to supply bottlenecks and inflated prices due to global supply chains.
    Reusable protective coats and reusable mouth and nose protection are very good alternatives.
  • Daily exchange of work clothes, as it is also common in hospitals. This prevents employees from going home with their work clothes, contaminating their private clothes with their work clothes in the locker or having to wash their clothes at home out of necessity.

Workwear in nursing homes as Employee Motivation

The labor market for nursing staff is already tight and this situation will become even tighter in the coming years.

Workwear in nursing homes can motivate and prevent demotivation:

  • A good fit, modern design and practical details are important, as workwear is one of the most important work tools.
  • Daily availability and the option to replace in the event of soiling.
  • Dressing new employees immediately with the right items in the right size is important for the "first day at work".
  • A logo and a high-quality collection show appreciation for the team and offer the opportunity to differentiate yourself as an employer.
  • Good, professional preparation ensures quality, relieves employees and reduces anger within the team.

Experience has shown that workwear is the most important key factor for overall satisfaction with the laundry service. This will become increasingly important in the future.

New technologies / systems

In recent years, a number of new technologies established and some developments are emerging. Industry 4.0 or Textile Service 4.0 will also take place in care homes.

RFID UHF Transponder

With RFID UHF technology, hundreds of garments can be scanned simultaneously without any effort. This enables a new level of transparency, fast inventories and new applications such as automatic laundry machines.

Uniform Dispensing machines

Uniform Vending machines have been in use in hospitals for over 20 years and are already used for 2/3 of new rental contracts in Germany.
In recent years, clothing vending machines have also begun to establish themselves in retirement homes.


The function is as follows:

  • The employee logs in to the machine with their ID card or personnel number,
  • The correct compartment in the box opens,
  • Thanks to RFID UHF technology, the machine knows which part has been removed and assigns it to the employee.
  • The used parts are disposed of in the disposal box and the employee can then remove new parts.

Networking with the laundry

With the Internet of Things (IoT), laundry automation systems, mobile recording devices and antennas in the laundry can be integrated into an overall system.

By accessing the programs in the cloud (server on the internet), the programs can be used in the care home and at the customer's premises. Statistics can be called up online and everyone has access to their data.

Networking the supply chain

UHF RFID technology can track a garment during during production, stock management and the complete laundry cycle.

This will open up completely new possibilities with regard to supply chains. Similar to printer cartridges, which can already be ordered directly through the printer on the internet, textiles can then be reordered as required and without any effort.

Artificial intelligence

For the future - there is an application for artificial intelligence in the textile supply sector.

Which article is needed at what time and how much of it? When do supply peaks occur? How many items need to be replenished and when? Where are costs getting out of hand? Is there a hygienic risk?

Artificial intelligence can help with all of these questions in order to increase security of supply, optimize stocks and avoid risks at the same time.

Type 1 "OUTLET MODEL":
The nursing staff washes the workwear themselves

The nursing home buys the uniforms for the employees or supports the purchase of the clothing financially. The employees wash the clothing themselves at home.
Disinfectant washing is not guaranteed in the household washing machine and pathogens can be transferred from the home to the nursing home. 

Pros

  • Favorable for the nursing home

Cons

  • Hygienic reprocessing not guaranteed
  • Spread of infections between nursing home and home.
  • Not attractive for employees

Conclusion

This type of care is no longer up to date and entails considerable risks.

Type 2 "DO IT YOURSELF":
The care home washes the workwear for the employees

The nursing home buys the clothes for the staff and washes them in its own laundry room.
This only makes sense if at least the residents' laundry is also washed in-house.
In this case, certified and disinfecting washing processes must be used.

Pros

  • Simple, streamlined process
  • High customer satisfaction, with conscientious staff

Cons

  • Higher Costs for employees
  • Higher Energy Costs
  • The challenge of vacation and sick leave cover
  • Certified washing processes require testing and investment costs
  • Almost all costs are fixed, no cost transparency
  • Required space in the nursing home

Conclusion

Currently, there is no trend towards insourcing (more laundries in care homes are being closed than newly built).
As there is no reliable textile service in some areas, this is always an alternative to ensure supply.
However, for homes that do their own laundry, this is worth considering - especially in conjunction with an automatic uniform vending machine.

Type 3 "BUY IT YOURSELF & HAVE IT WASHED":
The care home buys the workwear and has it washed by a contract launderer.

There are still some homes that buy the textiles from the catalog and then have them washed by a contract launderer.

Pros

  • Many small laundries offer contract laundry services.
  • Maximum flexibility in the choice of clothing

Cons

  • Many industrial laundries only provide rental serivices - There might not be a joice.
  • The nursing home needs to procure the uniforms and lable ever item, is not coordinated with the laundry.
  • Usually no transparency regarding the whereabouts of the uniforms.
  • Higher purchase prices than in textile service
  • Nursing homes buy garments that are not optimized for the processes in the laundry. (Quality problems, higher costs, higher wear and tear)
  • Administrative work in the care home

Conclusion

In most cases, this is a compromise and not a real system. This is also the reason why this solution has no real future.

However, if it is implemented with a good software, the selection of a good collection, very good integration of the supplier and the laundry, as well as an automatic uniform vending machine, this can also be a well-rounded solution. As the project planning is complex in this case, it will only pay off for nursing home chains in the medium term.

Type 4 " ESTABLISHED":
A rental launderer delivers personalized workwear with or without wardrobe service

Probably over 2/3 of nursing homes use personalized rental workwear.
This has been an established system for over 40 years.

The laundry keeps a stock of new and used items, memorizes the garments for each employee in the care home and the wash cycle is controlled by barcode or HF RFID transponder.

The equipment for a daily exchange is between 8 and 11 items - depending on the laundry's logistics. When the employee leaves, the returned items are placed in the used stock and the remainder is charged for the items not returned.

Sorting in the laundry is very time-consuming, but is often supported by large sorting systems.

In the locker service, the service driver loads the lockers. Each employee has a key to their compartment.

Pros

  • Works very well with sufficient par-level and a good laundry service.
  • Every employee has "their" clothing from "their" department
  • Full service from the textile service. Hardly any administrative work by the care home

Cons

  • New employees often have to wait for their clothing.
  • Residual value of uniforms of employees who have left often has to be covered by the nursing home, as the employees have already received their last pay-check.
  • Mistakes when loading the compartments or sorting in the laundry lead to bottlenecks and additional work. 
  • Very high stocks of clothing in the laundry warehouse.
  • Nursing home can only choose from a limited catalog of clothing.

Conclusion

It is a very good and proven system. It is still a very good solution, especially for homes with few employees.
However, due to the usual billing per item per week, savings often are made in the wrong place and the stock does not guarantee a daily exchange.


Overall, there are a lot of items in circulation or in stock at the textile service and manufacturer, so the system is becoming increasingly complex with the high staff turnover due to interns, part-time staff, etc.

Type 5 "KEEP IT SIMPLE":
Pool clothing with open shelf

A very simple type of workwear supply:

1. A 5-7 fold supply of size-related clothing (no label with the name of the employee)
2. Storage centrally on a shelf or in a cupboard
3. Each employee takes the clothing they currently need.


This logistic has only been implemented in isolated cases to date.

Pros

  • Very simple implementation
  • Low investment costs
  • New employees have immediate access to the clothing

Cons

  • Only works with sufficient staff discipline. (no hoarding in private lockers)
  • Higher par level is required than for vending machines.
  • Shelves must be maintained daily, otherwise the laundry piles will become untidy.
  • Clothing shrinkage is not controlled.
  • Size-related pool for interns etc. still necessary.

Conclusion:

This is certainly an alternative, but should only be implemented with RFID UHF technology. This enables a quick inventory of the shelf and, if necessary, a check of the stock in the lockers or living areas.


However, one must be aware that this is an error-prone system that requires regular maintenance by a responsible person.

It is questionable whether this system will be widely implemented.

Type 6 "NEW":
Pool clothing with automatic dispenser

Employees log in to the machine with their staff card, the correct compartment opens automatically and the machine registers which item has been taken.

Each employee has a "credit", i.e. you can only take 4 parts, for example. The system is then blocked until the used parts are discarded in the disposal cabinet.

This is therefore a closed system that prevents errors by employees and also errors by the service driver.

Special sizes of clothing or professions with very few employees should be issued with named uniforms.

Pros

  • Very high availability of clothing for every employee.
  • Clothing for new employees from the first day
  • Management of visitor coats
  • Around 50% less stock in circulation
  • Greater flexibility in the clothing collection
  • Complete transparency
  • No waste with employees who have left the company
  • Lower costs in the laundry (hardly any sorting work, no storage process)

Cons

  • Acquisition costs of the laundry vending machine
  • Limitation on the number of size items

Conclusion

The system works regardless of who buys or washes the laundry and does not necessarily have to be implemented in the laundry - although this is beneficial for overall transparency.

The costs for the vending machine are largely financed by the lower investment in textiles, significantly better use of the clothing (no used stock) and savings in the laundry.

In future, clothing manufacturers will be able to offer "never-out-of-stock", similar to what is already being practiced with printers.

The automatic laundry machine will also further establish in care homes in the medium term. Many homes are already being equipped with this technology.

What is the next step?

We support decision-makers in care homes and textile services in choosing the right logistics.

Summary

Increasing hygiene requirements

Hygiene requirements will continue to increase or remain very strict in the coming years, as nursing homes are home to a large proportion of the vulnerable population.

This means that daily change of workwear, certified and disinfecting washing procedures and sufficient protective clothing are necessary.

Customized collections are on the rise

Customized collections are gaining popularity due to their ability to cater to individual preferences and needs, offering a personalized touch. This trend reflects a growing demand for unique and tailored products in today's market.

Laundry vending machines and RFID offer new opportunities

Regardless of who buys the clothing, vending machines offer a new technology that is already proving its worth in hospitals. These vending machines have many advantages (greater availability, less equipment, complete transparency, individualized clothing collection) and are also beginning to establish themselves in nursing homes.

Personalized workwear is still a good solution

Personal workwear remains a very good system in the long term - with all its strengths and weaknesses. The important thing here is not to save money in the wrong place when it comes to equipment and for the laundry to ensure good throughput times and stock availability.

There is no trend towards laundries in nursing homes

Washing clothes in the care home itself only makes sense in exceptional cases and will increasingly become the exception in the future.

There is therefore no trend towards the construction of new in-house laundries - more laundries are being closed than new ones built.

Washing at home is out!

Employees who (have to) wash their own clothes at home are an exception. Due to hygiene risks and the tight labor market situation, this will become less and less common.

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Energy

Energy Costs – Strategically Manage Energy in the Laundry!

Energy costs are exploding – and the laundry industry is very much affected due to high consumption and long-term contracts with customers.

The laundry industry is very much affected by fluctuating energy prices due to high consumption and long-term contracts with customers.

Over the last years, gas prices fluctuated wildly. Energy taxes are constantly being increased in the course of climate protection.
How should a textile service entrepreneur react?

Key points in energy management in the laundry:

  • Is energy a bottleneck? Are energy costs relevant to the company's success?
  • What energy price fluctuation can the company afford? How should the prices be hedged?
  • What are the benchmarks? Setting the right goals.
  • Focus on quick cost-saving opportunities (ABC analysis)
  • Attention to capital commitment: How quickly do energy investments need to pay off?
  • Implementation measures
  • Control and constant monitoring

In this article, I would like to make a contribution, especially for the textile service industry - but the content can also be applied to other industries that face similar challenges.

Free STRATEGY SESSION for ENTREPRENEURS

What are the topics in Energy Management?

Energy Costs have several challenges:

  1. Current and impending price fluctuations - the market got more volatile! How can and should we protect ourselves?
  2. Energy costs are rising in the medium and long term. The right strategic orientation is important.
  3. Identify and implement cost-saving measures.
  4. Can/should we also produce energy ourselves?
  5. Protection against blackout.

These are all topics that you can spend hours and days on. But you have to be careful not to be remote-controlled by political or public interests.

Therefore...

How important is the topic of Energy in the laundry?

Firstly, it is important to decide whether energy is an A, B or C topic:

  • A-topic: "The management of energy costs is crucial for business success and energy is an absolute bottleneck resource. More important than new revenue, productivity, employees, etc.
  • B-topic: "The management of energy costs is important for the profitability of the company, but other topics such as customers and associates are more important."
  • C-topic: "Energy costs have no significant impact on the company's success. Measures in the area of energy mainly serve to secure the supply or the sustainability policy."

In the great majority of cases, the topic of Energy is either a B or C topic.

First things first ... second things not at all.

Peter Drucker // Pioneer of modern management

With this in mind, it is important to ensure that energy issues do not take up more of the owners' or management's attention than necessary. It is better to delegate this if possible or to schedule it specifically.

Energy Management helps to set the right goals... and to the right extend. Not too much and not too little.

Attention: "Overengineering"

"Overengineering" is one of the 7 types of waste in lean management and it means that you do more work than the customer wants. In German-speaking countries in particular, we are very sensitive to this.

Equally, the same applies to the topic of Energy. Sustainability quickly becomes a hobbyhorse and can keep you busier than you should be.

The critical questions are: "What is my business?" and "What are my customers paying for?"

Of course, there's nothing wrong with investing more - if you can afford it. But then you have to be honest about the fact that this is a kind of personal contribution to charitable purposes.

Hedging against fluctuations in the purchase price

The fact is that fluctuations in the purchase price increased and that these fluctuations are likely to continue.

Some examples of this are:

  • September 2021: extreme price for natural gas across Europe
  • 2020: extreme electricity price peak in Texas
  • Autumn 2021: the price of coal in particular and electricity in general in China

The reasons for this are the increased globalization and the effects of the switch to renewable sources of energy, which at this point are significantly less reliable. In addition, ensuring grid stability lags 10-20 years behind political decisions.

Without doubt, we must therefore expect price fluctuations for ALL energy sources and not be guided by past experience. Times have changed!

IMPORTANT: if the prices for energy are relevant for the budget, they must also be fixed for the next 12-36 months.

There are thousands and thousands of people selling and buying on the Energy Price Market. Everyone believes that they are making a good deal with a transaction. Everyone should therefore be very modest about their own opinion on energy prices and price trends. You can assume that the market has more information than you have.

If you fix the prices for energy for 12-36 months, then one thing is guaranteed: either you are happy to have made a good decision or you are annoyed about the difference to cheaper spot prices that your colleagues are paying. But both are irrational, because you simply can't be certain.

Thus a recommendation:

  • Consultation with an energy provider on this topic.
  • Always secure prices for the next year at a minimum of 70-80%. (100% is usually not necessary and carries the risk that you have purchased too much in the case of a sales decrease).
  • Secure prices for the next 2-3 years at 30-60%.
  • Check whether it makes sense to be able to use both natural gas and heating oil as alternatives. The market for heating oil and natural gas moves independently to some extent.

The best thing is to have an energy consultant who can quickly recognize price movements and then react quickly and fix the remaining quantities for the 2nd and 3rd year. Alternatively, you can put the topic of " Energy Prices" on a quarterly basis and decide whether it is the right time to hedge the 2nd or 3rd year even further.

Here is a link to the current prices for the futures market: Futures Market Data

Under no circumstances is it advisable to buy electricity or natural gas on the spot market. A shortage of electricity, oil or gas cannot be predicted.

The Spot Market appears to be cheaper in normal times. However, only one massive price fluctuation in 5 years cancels out this difference. In the long term, the spot price is probably a few percent cheaper, the difference being the cost of insurance and better budgeting.

IMPORTANT: Briefly describe your own strategy for dealing with energy prices on an A4 page. (10 minutes work). This gives you your own guidelines and then simply implement them. That saves a lot of headaches.

Free STRATEGY SESSION for ENTREPRENEURS

Gas prices and electricity prices continue to rise

Energy prices are expected to rise at least until 2030, and probably beyond.

As soon as electricity or natural gas prices fall, taxes and charges on energy are increased and these increases are practically never reversed when prices rise again. This means that energy costs are likely to rise until the population or the economy is overburdened.

There is therefore a "pain threshold". How high this is and when it will be reached is pure speculation. My personal assumption is that we will reach a peak between 2025 and 2030.

It is therefore important:

  1. Change the value assurance terms in contracts with customers so that they also include energy costs. If possible, with a threshold value of 3%, as in rental contracts, so that an increase during the year can also be implemented.
  2. Do not agree to fixed prices with customers over a timeframe of several years.
  3. Leverage energy-saving potential
  4. Invite tenders for energy supply every 3-5 years

Energy management in the laundry

Energy management is a fancy word for replacing fire department activities with targeted measures that can be delegated more easily.

Essentially, energy management covers the following areas:

  1. Analyzing the current situation and potential in your own company.
  2. Settting long-term goals based on the industry benchmark and potential.
  3. Breaking down the long-term goals into specific annual objectives for the most important levers.
  4. Clarifying the responsibilities.
  5. Communicating the goals.
  6. Identifying concrete measures.
  7. Implementing the measures.
  8. Continuously monitoring consumption.
  9. Checking the results and taking further measures if necessary.
  10. Celebrating successes 😉

This is de facto a PDCA cycle, as in quality management, and can also be easily certified (ISO EN 50.001) - if this makes sense or is necessary.

Every company already implements one or another aspect of energy management. You don't have to be perfect, but it makes sense to constantly improve the management system. One step at a time.

Recommendation: Self-critical assessment of the current state of energy management (= audit), if necessary with an external expert, and continuous improvement. ISO 9 000 certified companies can use the QM for this purpose.

Quick wins for Energy Savings

Some ideas for simple and quick measures:

  1. Optimize machine utilization. Highly productive systems have lower energy costs.
  2. Check the steam system. Very often there is quick potential in the steam supply: Replace broken stevedores, repair defective insulation, avoid steam plumes, and remove unneeded lines.
  3. Maintain the compressed air. Is there a noise when the operation stops? EVERY leakage costs electricity.
  4. Improve water consumption. Every liter counts.
  5. Switch off machines that are not needed completely - turn off the steam supply if necessary.
  6. Monitor water, gas and electricity consumption on a daily basis.
  7. Clean the dryers
  8. Check the remaining moisture - Does the ironer or the dryer overdry?
  9. Check the load profile of electricity consumption - it is often very easy to recognize abnormal loads at night or at the weekend.

Ideas for further quick wins?... simply write them in the comments under this article.

Free STRATEGY SESSION for ENTREPRENEURS

Define energy objectives

The most important parameters in the laundry are:

  • Water usage efficiency,
  • Gas or oil usage efficiency,
  • Electricity usage efficiency

Organizational Measures - Energy Officer

As mentioned at the beginning, it rarely makes sense for the CEO or even the plant manager to be personally responsible for the topic of energy.

However, it is possible to make it an A-task for a technician, a Process Engineer or QM. It is important that facility services, process E

engineering AND the respective team leaders all pull together.

One person should be responsible for:

  • Control the measured values and interpret deviations.
  • Determine the cause of deviations.
  • Ensure the implementation of the action plan.
  • Publish the results.
  • Further train and obtain information on new technologies and processes.

The task of the Management Board is to set the targets, make inquiries on site, provide resources and help solve the problems in the event of deviations.

It is also very motivating if the officer is given a small budget that they can dispose of themselves. Of course, further training also makes sense - e.g. "energy officer"

This ensures that the topic of Energy gets enough attention.

Monitor Energy Consumption in Real Time or Daily

If you start to measure the Energy consumption values on a daily basis, enter them in a chart and start to work diligently with the values, you can save 5-10% with this measure on your own.

And even more if you set up real-time measurements for the most important water, gas and possibly electricity consumers. These systems are becoming increasingly cheaper to install and more economical to implement.

In this way, you can avoid a drain valve hanging and only realizing at the next gas bill that you have wasted a lot of energy in the last 4 weeks! (happens often and in many companies)

Furthermore, employees are constantly being sensitized to the issue. "What gets measured, gets done".

Of course, if you want to do it really well, then it is better to use a quality control chart. Working with statistics or "statistical process control" is not as complicated as it looks at first, and it helps enormously to distinguish between the normal spread of measured values in the process and special information.

In this sense, training the Energy Officer is very important.

Prioritize Energy Saving Measures Correctly

Sort the cost-saving measures in the following order:

1. High savings, low investment
2. Low savings, low investment
3. High savings, high investment (Boss must be asked)

The difference between low and high investment is the amount for which the building technician or process engineer does not have to ask the boss.

Then the Energy Manager keeps the list of measures, evaluates the individual measures and organizes their implementation.

The above classification is in reverse order, as external energy consultants often do. A consultant is often interested in expensive projects and not in measures that cost nothing ...

ATTENTION: Correct Valuation of Investments

In any case, all investments that pay off in 3-5 years or that are made for other reasons (replacement procurement, more capacity, more quality/customer benefits) make sense.

Investments in Energy Saving that do not pay off in 3-5 years must be well thought through before tying up money for them. If you are largely financed with equity, then you can make such investments, otherwise it might be more sustainable to reduce the company's debt in the current situation.

This may be controversial, but the task of a laundry is to offer a good service at competitive prices and not to tie up money in areas that the customer does not pay for.

Particularly critical here is the subsidization of investments by the state. A subsidy is often granted that is just large enough to enable the investment to be financed externally. This means that the state de facto assumes the equity for the loan. However, the repayments still tie up the company's cash flow and this appears as a liability in the bank's credit rating.

Summary

  1. The prices for natural gas and electricity will fluctuate more in the coming years. Simply buying from the spot market must be reconsidered and replaced with a structured approach if necessary.
  2. In most cases, energy is a B issue. Market success, associates and textile purchasing are more important in most cases. Therefore, delegate the topic of energy to someone in the company who will make it her/his A topic.
  3. Beware of overinvestment in energy! Question: "What is the customer paying for?"
  4. Critically analyze anything with a payback period of more than 3-5 years.
  5. An analysis of the current situation and the introduction of energy management makes sense and pays off.
  6. Daily or, even better, real-time monitoring is a good measure in itself, as it gives the issue importance.
  7. Arrange a free consultation. An outside perspective in this area is always valuable.

Free STRATEGY SESSION for ENTREPRENEURS

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RFID Technology

UHF RFID for Laundries – A Comprehensive Guide (August 2022)

UPDATE August 2022

This article is intended to provide comprehensive information about UHF RFID systems for laundry. This is from the point of view of a practitioner who has gained a lot of experience over the last 20 years, with additional research over the last 4 years.

Tips for reading the article:

For an overview of the topic, it is sufficient to skim the table of contents and read the summary at the end. The detailed information is grayed out for those who want to know in more detail. The videos give essentially the same information. For easier playback, you can use the playlist: link to the playlist on YouTube. 


UHF RFID transponder for laundry/textile service:

  • 60 x 10-15 mm
  • washable, even suitable for ironing and steam sterilization, and - depending on the manufacturer - over 150 cycles lifetime
  • Reading range > 5 m
  • up to 99% read rate in bulk
  • writable (SGTIN recommendation) and password protection
  • Price < 0,35 Euro

PLEASE COMMENT: I have tried to work up as simply as possible and thoroughly everything around the UHF RFID transponder for textiles. But nobody is perfect ... I am therefore grateful for any suggestions to improve this article. Furthermore, I invite you to discuss this in the comments.

PLEASE GIVE FEEDBACK regarding the translation. I did my best, but some terms might sound odd to a native speaker or some terms are used differently in several parts of the world. So don't hesitate to write a comment or contact me.

CLARIFICATION: I am a sales partner of HID Global in the German-speaking area. HIC Global offers a complete textile management platform, including a software suite and RFID UHF components. However, this article is formulated in a vendor-independent way, and I have tried to put myself in the shoes of the decision-makers in the textile service industry - which I am pretty good at 😉

Do you want fast results with UHF ...

... and avoid making common mistakes?



HF and UHF RFID transponder types compared.

In the 1990s, LF (low frequency) RFID transponders were first used, mainly for automatic garment dispensers. These have been replaced by HF (high frequency) RFID transponders from the year 2000. In 2008, the introduction of UHF RFID began and the Wozabal Group was a pioneer in the industry.

HF

UHF

RFID HF Transponder

RFID HF Transponder "Blue Tag" von HID Global

RFID UHF Transponder

RFID UHF Transponder C10 von HID Global

7-16 mm diameter

30-70 mm length, 10-15 mm wide

ID fix

ID codierbar, Kennwortschutz

15-40 cm (5" to 1 ft) reading range

4-7 m (12-20 ft) reading range

Mulitread

Multiread with 10x speed compared to HF

Frequency: 13,56 MHz
Standard: ISO 18000-3

Requency: 865–868 MHz (Europe),
902–928 MHz (North America)
Standard: ISO 18000-6C

Advantages:
fewer false readings ("leakage") due to shorter range, very resistant, readability in wet condition

Advantages:
Reading in bulk, longer range, cheaper antennas, encoding possible

Price < 0,30 USD

Price < 0,32 USD

Hanging Uniform Dispensers, Uniform Rental, Swobs

Flat linen, Uniforms in SMART-Rooms, Uniform Rental

Current Development

  • HF RFID will continue to have a medium-term role in uniform rental, especially in hanging automatic garment dispensers and in existing applications where a switch to UHF is not worth it.
  • UHF RFID also has significant advantages for workwear. Proper installation allows individual garments to be read equally well as with HF. Internationally, many companies are therefore switching from barcode directly to UHF RFID.
  • As of 2022, UHF RFID is used by about 60% of laundries in German-speaking countries (Austria > 90%) and will become more and more common in the flat linen sector.
  • As of 2022: A working group on digitization is meeting at the DTV (similar to the TRSA in Germany). Important recommendations regarding the labeling of textiles and the improvement of the procurement process are being worked out. However, the discussion is not yet finished, as some software manufacturers are very challenged with the implementation of the GTIN.
    On YouTube there is a playlist on the topic: link to playlist
  • Interesting technological developments regarding transponders, hardware and software. More on my YouTube channel: link to YouTube channel

Layout of a UHF RFID transponder

The UHF RFID transponder consists of

  1. One chip (which is effectively produced by only one manufacturer),
  2. a housing with the primary antenna and 
  3. of a secondary antenna.

The chip with a primary antenna is readable but has only a short range of a few inches. Finally, the secundary antenna achieves a range of up to 7 meters (20 feet).

RFID UHF Tag für Textilien und Chip

RFID UHF Tag für Textilien und Chip

The functionality of the transponders is standardized and every UHF RFID transponder is therefore compatible.

The differences between the manufacturers are found in

  • the characteristics of the primary antenna,
  • the ruggedness of the transponder's housing,
  • the quality and functionality of the secondary antenna,
  • the size and the design,
  • the policy regarding the password protection and the encoding of the tag,
  • the reproducible quality in production and
  • the delivery capability

In most cases, the chip itself is sourced from the same manufacturer.

Functionality of UHF RFID transponder

The UHF RFID transponder used in the laundry is a passive chip. Unlike active chips or semi-active chips, the transponder requires energy from the antenna or reader to be activated. The tag sends back a modified signal.

Funktionsweise von UHF RFID Transpondern

Funktionsweise von UHF RFID Transpondern

UHF RFID transponders can execute commands: (HF tags do not have this function)

  • Encoding of the transponder
  • "Kill" or permanent destruction of the transponder
  • Setting a password for writing or reading the transponder

The simple reading of the ID of the transponder takes place within milliseconds virtually in real time, so that an entire container with over 200 pieces can be read within 10-15 seconds.

Encoding is much slower and can take 30-120 seconds per container. (which is still relatively fast compared to initializing each item manually).

The functionality of UHF RFID systems was standardized by GS1 in 2004 and published as EPC UHF Gen 2 in the ISO/IEC 18000-6C standard.

Factors affecting the range of RFID UHF tags

In order to successfully implement UHF RFID technology, a sound understanding of the limitations is important. Used correctly, this technology can be implemented very well and very stable. However, where there is a lot of light, there is also a lot of shadow.

The major challenges are:

  1. not a 100% read rate for a single reading.
  2. limited reading rate in hot or wet conditions.
  3. Water absorbs the UHF frequency and wet transponders are not readable in contrary to HF.
  4. Misreading, i.e. unintentional reading of transponders ("leakage")

In the following, I would like to go into detail about the causes.

The reading distance of the transponder is dependent on direction

Leseradius UHF RFID Transponder unterschiedlich je nach Ausrichtung

Leseradius unterschiedlich je nach Ausrichtung der RFID Antenne zum UHF Tag

The reading range is greatest when the largest possible surface area of the transponder is facing the antenna.

If it is read at an angle or from the side, the range is significantly reduced. (s. diagram)

Therefore:

  • either move the textiles,
  • install several antennas or
  • incorporate deliberate reflections.
  • make sure that the chip is not attached to a fold of the textile.

"Blind spots"

UHF RFID Tag im "Blinden Fleck" der RFID Antenne

UHF RFID Tag im "Blinden Fleck" der RFID Antenne

The wavelength for UHF RFID is around 30-35 cm (1 ft).

Every 30 cm (1 ft), therefore, there is a risk that the transponder will not be activated because it is located at the zero point of the wave.

The reader can prevent this blind spot by changing the frequency. However, this requires a longer reading time.

Therefore:

  • either move the textiles,
  • install several antennas,
  • incorporate deliberate reflection or
  • wait for the frequency modulation of the reader.

Transponders interfere with each other

eingeschränkte Leserate bei Wäschestapel mit vielen Tags direkt übereinander

eingeschränkte Leserate bei Wäschestapel mit vielen Tags direkt übereinander

Each transponder has an antenna and is activated simultaneously by the reader. This means that the transponders can interfere with each other.

Therefore: 

  • Especially with small items, do not always place the transponders in exactly the same position.

Misreadings due to deflection of the signal

Fehllesung durch Ablenkung des UHF Signals

UHF Fehllesung durch Ablenkung des UHF Signals durch Metalle, Menschen, Wände etc.

Metal, a wall, a ceiling or even a person can deflect the signal and tags that are nearby are suddenly read unintentionally.

This problem occurs especially when the Reader is constantly running at maximum power.

Therefore:

  • Workplace design by an expert
  • Using a smart reader that a) requires less power and b) is not on all the time.

Limited reading performance with hot textiles

eingeschränkte Rechweite des UHF RFID Chips bei heißer Wäsche

eingeschränkte Reichweite bei heißer Wäsche, z.T. wird der UHF RFID Chip temporär deaktiviert.

Most UHF RFID transponders "survive" ironing at around 200°C (400 F), heat-sealing at 220°C (430 F) and sterilization at 134°C (280 F).

However, the heat can completely or partially deactivate the transponders for a short time.

HID has already proven that scanning is nevertheless possible by installing a reading point after the ironer and before the folding machine.

Therefore:

  • Thoroughly test the transponders with regard to the effect of the temperature.
  • If necessary, installation by an expert

Limited read performance in wet conditions

UHF RFID hat eine eingeschränkte Reichweite bei nasser Wäsche

UHF RFID hat eine eingeschränkte Reichweite bei nasser Wäsche

Unlike LF and HF, UHF RFID cannot be read through water. However, textiles after the press or centrifuge with residual moisture and normally soiled laundry can be read very well.

There are differences between different transponders regarding the readability in wet conditions.

Therefore:

  • Do not install reading points when textiles are completely wet.
  • Test the transponders used for this application.
  • Switch to HF technology if necessary

Limited reading performance with metal

UHF RFID hat eine eingeschränkte Leserate bei Metall

UHF RFID hat eine eingeschränkte Leserate bei Metall

Metal shields or interferes with the antenna of the transponder. (even if it is behind the tag)

Therefore:

  • Sufficiently test containers in use in connection with the UHF installation. (usually metal mesh containers are not a problem).
  • Installation and workplace design by an expert.

... the good news

Through good design of the workstations or reading points and the use of modern hardware, read rates of well over 99% can be achieved.

Over the entire process in the laundry, 99.95% of all transponders have already been read and documented by external expert reports.


Quality requirements for the purchase of UHF RFID chips

It is important to buy the right quality of transponders from the beginning, otherwise you will have a more serious problem in the implementation. The replacement of transponders costs many times more and must be amortized within a shorter remaining life of the textile.

When making a purchase decision, consider:

  • the actual lifetime of the UHF transponders
  • the actual process fitness in YOUR plant
  • for the healthcare: MRI Compatibility
  • a uniform quality of all transponders (no deviations)
  • the policy regarding encoding and password protection
  • Delivery terms of the manufacturer
  • Availability
  • Price

Download a FREE Checklist for UHF Implementation

And never miss out of current information for the industry.

Actual durability of the UHF RFID transponders

There are significant differences between individual manufacturers in the actual service life - due to the design of the housing and the quality of the secondary antenna.

It is important to test both the function of the chip and that of the antenna at the end of the life cycle. For the purpose of this test, the entire washing process needs to be run through.

The result may thus be:

  1. The transponder is fully functional, has approximately the same reading rate as at the beginning and is therefore fully functional for longer than the service live of the textile. (=realistic target)
  2. The transponder has only a limited reading range. In this case, the secondary antenna is probably damaged.
  3. The transponder no longer works (total failure). This is probably due to damage to the chip.

Since the reprocessing processes are different and no standardized external test procedure has been developed to date (analogous to the quality label), it is advisable to carry out the tests yourself in your own plant.

Subsequently, it makes sense to define standards for the requirements of UHF RFID transponders in the industry and to prescribe these test criteria to the manufacturers.

Actual process fitness in the laundry

Transponders differ in

  • the reading range
  • the ability to read single items without leakage (reading wrong pieces)
  • the readability in wet condition
  • the readability of a stack of textiles

It is therefore important to qualify the transponders for your own process so that the requirements of all workstations and applications are met.

For process suitability, it must be tested for each read point whether

  • the reading rate meets the requirements and whether it
  • there are increased misreadings. ("leakage")

ATTENTION: some installations are extremely optimized for a transponder from a particular manufacturer. In this case, the laundry becomes dependent on one supplier. A good UHF RFID installation is characterized by being robust to any variations in individual transponder performance criteria.

MRI Compatibility (Healthcare)

The secondary antenna of the transponder can cause considerable interference with MRI scans. This primarily affects patient gowns, pajamas, and sheets that are used during the examination. Since patients are usually not supposed to be changed, and in some cases textiles from the wards are also used in the MRI, ALL tags need to be MRI complient.

There are transponders that are MRI compatible and do not cause any significant interference. These are preferable in the case of hospital supply.

Consistent quality

The production and assembly of the transponders are either done manually or fully automated. Accordingly, there may also be deviations in the manufacturing process.

Therefore, consistent quality and sound quality management by the manufacturer are crucial.

Ways to evaluate this are:

  • Certification of the manufacturer
  • Obtain references
  • Audit on site

Logistics service of the manufacturer

The administration of the transponders with the various suppliers can be very time-consuming. As a result, some manufacturers send the transponders directly to the textile manufacturers and thus help simplify the entire supply chain.

In this case, however, each textile service company sends the transponders to the textile manufacturers or via the manufacturer.

When the quality of the transponders is standardized, we hope that the textile producers will purchase the transponders and sell the textile with the transponder included. This would represent a significant simplification for all parties involved.

Availability

The market is currently very much on the move. Many large companies in the textile service sector and also hotel chains are making decisions in favor of UHF RFID technology.

It therefore happens that manufacturers repeatedly reach the limits of their capacity.

It is therefore important to have framework agreements with corresponding obligations to ensure availability and, if necessary, to list a second supplier.

Price

Fortunately, the purchase price for transponders reduces from year to year. When negotiating framework agreements, it is therefore necessary to weigh up between a more favorable price due to a higher volume and the chance of more favorable prices in 1-2 years.

Testing of UHF RFID transponders

UHF transponders are used in large numbers in many areas such as retail, the automotive industry, etc.. However, tests for the washing of semiconductors are not yet standardized.

There are some initial concepts here and it would make sense for the industry association to moderate the development of a standard. One test institute that has already carried out tests is the EECC (European EPC Competence Center).

However, it will be necessary in any case to qualify the transponders for your own requirements.

I have created detailed checklists and recommendations for testing UHF transponders. You can download this with the following link ...

Download a FREE Checklist for UHF Implementation

And never miss out of current information for the industry.


Industry standards

The DTV's Digitization Working Group is currently working on recommendations for the following topics:

  1. Encoding of the UHF RFID transponders with an SGTIN
  2. Definition of the minimum requirements for master data in order to standardize the cooperation between textile manufacturers and the textile service or also between textile service companies and their customers.
  3. Standardized processes in the supply chain

First results have been presented, but due to the pandemic the final recommendation has been delayed.

Attaching UHF RFID transponders to textiles

The types of attachment are:

  1. Sewing in by the textile manufacturer (usually in the hem).
    This is often the most cost-effective option, as many manufacturers do not charge additional costs and it does not affect the appearance.
  2. Sewing on with a pouch or a textile label, usually with logo.
    This is by far the most expensive option, as the pouch costs money, the chip has to be inserted into the pouch, and sewing on - even with an automatic machine - is time-consuming with an hourly output of only 60-100 parts per MA hour. Additional costs of 25 cents and more are therefore to be expected. On the other hand, a pouch with a logo consistently represents added value.
  3. Patching
    "Heatsealable tags" or transponders for patching are a very good alternative. The hourly output is up to 200 pieces and the durability is positively tested.

Important aspects to consider:

  1. Follow the manufacturer's instructions.
  2. Especially in the case of small items, the transponders should always be placed in slightly different locations, if possible, so that they do not interfere with each other when reading a stack.
  3. Do not attach a tag to folds, as this also reduces readability.
  4. When the manufacturer sews in the transponder, it must be ensured that the transponder is not bent, sewn over the chip or even the secondary antenna is cut off. (all already happened and partly difficult to recognize, because the transponder still has limited functionality).

UHF RFID and Data Privacy

This is a sensitive topic throughout and it is recommended to address this proactively. In 2003, Metro installed UHF RFID transponders on its customer cards without informing its customers, and in 2008 Deutsche Bahn received the "Big Brother Award" because it also fitted the BahnCard with a UHF RFID chip without informing its clients.

The fear is based on the fact that the transponder can be read by the employer or various snoopers without knowledge and time-lines could be derived from it. In this respect, an HF transponder has an advantage, since the shorter reading range makes concealed monitoring more difficult..

However, this is not a problem with RFID UHF laundry tags, since no reference can be made on site between the wearer of the uniform and the transponder without a database connection. This means that no personal data is involved.

Regardless, it is recommended, especially when used for workwear or residential laundry, to be forthright about this issue and inform customers about the use of RFID, update the privacy policy, and encourage customers to inform their employees as well.

UHF RFID Systems in the Laundry

Listing of already implemented applications:

Check-in on Soiled Side

Installation of multiple antennas that collectively capture over 99% of soiled textiles and generate the order based on the soil count.

IMPORTANT: UHF RFID is no substitute for good operational management and adherence to the wash schedule is even more important.

Batch documentation for PPE, surgical drapes and gowns

Reading in all pieces of a batch so that the batch records can be referenced to every piece in the batch.

Einlesen am Finisher

Merging of individual uniforms with the tag of the hanger. (At the feeding station, at the quality check-point, or at a singularization  similar to reading points with HF technology. (Only experienced technicians can implement this without risking leakage)

Reading of single items at the towel folder

Reading of each individual piece either during feeding. Pieces without transponders are rejected, as well as parts that should be rejected according to the Laundry software. (reclamation parts, end-of-life).

The implementation must be checked per machine type, but can usually be done without intervention in the folding machine. An interface is not always necessary, but advantageous.

Reading of single items at the ironer

Reading of each individual piece either during feeding or before the folding machine. Pieces without transponders are rejected, as well as parts that should be rejected according to the Laundry software. (reclamation parts, end-of-life).

The implementation must be checked per model, but can usually be implemented with dry contacts to the existing reject buttons.

This has already been successfully implemented several times, although the heat after the ironer is a challenge.

Automatic sorting

Parts tagged with UHF RFID can be sorted in real time, especially if they are encoded with the part number (SGTIN). Already successfully implemented.

However, it is important that the process also works without UHF RFID, otherwise the system cannot work with non-chipped parts. (own experience!)

Stack verification

fully automatic or manual

The items in a stack are checked to see if they contain the right number and the right items, then they are combined to a virtual stack.

At this point, picking into the customer's order can also take place immediately.

Check-out Cabin

In a cabin, 98-99% of a container's transponders can be read within 15 seconds.

Advantages: optimized reading and no false readings ("leakage").

To achieve 100%, a multi-step process is necessary.

Gateway

The containers are pushed through an "archway" with UHF RFID antennas. This is very fast and can deliver relatively good read rates.(+/-95%)

The challenges are misreading between different containers and non-reproducible conditions in case the containers are pushed manually.

Processing surgical drapes and gowns (medical devices), Sterilization

The transponder can be autoclaved (273 F or 134°C). At the assembly of the pack each piece is merged with the sterile pack. Before sterilization the packs are merged with the sterile batch.

Production data acquisition, process visualization

Practically as a "by-product", implementation of data acquisition and visualization can be carried out independently of the machine manufacturer.

Incoming goods control / procurement process

The incoming goods inspection can best be automated via a cabin. In the course of this, the articles can be encoded or recoded.

The "Digitization" working group is developing a process description from the order to the order confirmation, the delivery bill, the invoice, and the goods receipt.

Data is exchanged electronically throughout the process. This saves a lot of work and eliminates errors.

Note: this is technically possible, but still "dreams of the future", as the GTIN has not yet been implemented.

Inventory in the plant for textile, at the customer's premises etc.

Inventory of textiles, new and used goods in the plant, as well as any other inventory.
Taking inventory with the handheld antenna is relatively fast (approx. 5 minutes per area) and has a relatively high read rate (95-98%). However, it depends on the user and is therefore difficult to standardize.

Anti-theft system

Securing of exits in the plant or at the customer's site

Container tracking

Containers equipped with a transponder can be read with the same antennas. If necessary, a 2nd active transponder can also be considered so that a truck can always be read out as a whole without much effort.

UHF RFID transponders for the resident laundry are still at the concept stage. There are already some laundries and nursing home groups using UHF for resident laundry. The challenge is the payback of the transponder on the short time of use of the garment and the tagging of small items (e.g. socks, underwear).

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UHF RFID systems in hotel and hospital

Inventory at the customer

In 2-10 minutes per laundry room, a sufficiently accurate inventory can be taken with the handheld antenna.

This can be the basis for orders and/or shrinkage calculations.

Uniform Service with "SMART-Rooms"

The customer's employee gains access with his ID card and picks up the required clothing from the shelf. The employee is credited with the taken garment when leaving. After dropping the used uniform, the employee receives a new credit.

Management of the Inhouse logistics

In large hotels or hospitals, the linen center can be managed with UHF RFID.

Anti-theft system

Securing exits in the hotel or hospital.

Cost of UHF RFID

The costs of UHF RFID are divided into the acquisition costs of the hardware and software, the project costs and the operating costs, which consist mainly of the transponders and software licenses.

Investment in UHF RFID hardware

Since the UHF RFID hardware is significantly cheaper than the HF RFID hardware, the investment amounts to about $10,000 for a small installation and $100,000 for a laundry with a daily output of 20-30 tons (without process automation), which is very manageable and pays for itself immediately through the reduction in linen purchases

Cost of UHF RFID Project

A RFID project includes the following project phases:

  • Integration of RFID technology into the business model (strategy and marketing)
  • Planning of the installation and technical implementation
  • Design of individual workstations, if necessary
  • Process organization
  • Retrofit of textiles, if necessary
  • Training of employees
  • Conversion of customers

The costs for the project are extremely variable and can - from our own experience - range from very low expenditures ($ 10,000 to $ 20,000) to six-figure sums per plant.

What are the cost drivers in an RFID project?

  • Batch-Processes (Customer-specific processes) are easier to migrate than Pool-Processes
  • Retrofit is more expensive than purchasing new textiles with UHF tags.
  • High degree of automatization
  • Half-hearted implementations that cost money and bring no benefits

Therefore, to save costs is the recommendation:

  • make strategic decisions and not put them on the back burner.
  • start with a pilot project as soon as possible, as this is much cheaper than a forced conversion due to demand from current or potential customers.
  • start equipping new textiles with UHF RFID transponders as soon as possible.
  • involve experts who already have experience - it is always more cost-effective to learn from the successes and even more so from the mistakes of others.
  • Sound project management

Cost of UHF RFID transponders

The actual costs must always be considered in relation to the price of the respective service:

  • Flat linen: 1-2% of sales (assumption: 15% of sales for linen purchase, takes cost about 7-10% of linen purchase).
  • Uniforms: 0.4% of sales (assumption: 20% of sales for the purchase of garments, tags make about 2% cost of uniform purchasing).
  • PPE: 0.15% of sales (assumption: 30% of sales for uniform purchase; tags amount to 0.5% of PPE purchase).

This is, of course, an approximate calculation and can be different in every company. However, it can be seen that RFID UHF is very interesting for garments and especially also for PPE, and that many advantages can be implemented with relatively little expense.

What is the return on investment?

  • Customer benefits - elimination of ordering effort, no redundant inventory, customer-specific items easier to implement, improvement in delivery quality
  • More sales due to new billing methods
  • 0.5-2% of sales savings due to less shrinkage or charging for losses
  • Productivity increase of 10-30% depending on layout and process.
  • Savings of 1-3 days of textile inventory in the plant in case of pool processes
  • in case of rental, significant savings in tied-up textile capital at the customer (probably 30%)
  • higher delivery capacity results in higher stability in the fleet (no extra deliveries)

The calculation must be analyzed in detail per project and cannot be generalized.

Here, too, there is a difference between customerspecific (or batch) processes and pool processes. Pool processes have significantly higher project costs, but benefit immensely more from implementation than customer-related processes.

In the end, it is also expensive if you are the last one. Imagine if there was another insurance company that didn't take claims into account in its premium. This insurance company can not offer such competitive prices and quickly there will be all the customers with a bad claims history. Thus, if you are the last one, you are in deep trouble...

Textile Service 4.0, IoT

This technology thus enables many innovations in the industry. After OPLs (customer-owned laundry), contract laundry (COG) and textile rental, one can therefore rightly speak of Textile Service 4.0.

With UHF RFID as a basis, business processes can be redesigned:

  • new ordering processes
  • Significantly improved transparency
  • new possibilities of billing and contractual terms with the customer
  • new opportunities in marketing

In the future, readers will increasingly become SMART readers equipped with their own processor. UHF RFID is thus part of the implementation of "Internet-of-things" or IoT.

The future has already begun ...

Summary

UHF RFID is a significant advance over HF and will also replace existing HF applications in the long term.

UHF RFID is almost certainly a key technology of the future.

When it comes to implementation, relevant know-how is necessary to make the most of the opportunities and avoid costly mistakes.

In essential areas, sufficient standardization of technology in textile services has not yet been implemented. This is an important task for the industry associations.

The real benefit of this technology comes when you also rethink the business model.

Do you want fast results with UHF ...

... and avoid making common mistakes?


Additional information

Read More
News and Analysis

M&A of Elis SA Service Group – AComprehensive Analysis

The Elis SA buying spree is always exciting to analyze. In the last few days, I have updated my Excel file again with the latest numbers, and there are some compelling findings.

Highlights of the Elis Group's M&A activity:

  • Average purchase price: 1.6 x sales, 6.1 x EBITDA, 14.6 x operating profit and 28 x net profit.
  • Elis SA has bought almost unabated even during the pandemic: 33 transactions with € 210 million in sales since 2020.
  • Market entry in Mexico with the acquisition of the market leader generating sales of € 74 million
  • Virtually no focus within the laundry industry (industrial & commercial, healthcare, hospitality, matting, cleanroom, pest control).
  • 25 small transactions with less than €3 million in sales since 2020.
  • M&A dominates Elis SA's business model: € 3.5 billion in purchase price over ten years for 139 transactions compares to € 3.3 billion in total debt, and virtually all additional revenue growth corresponds to acquisitions.

Further, I would like to share fascinating insights in this article and critically question the meaningfulness of this M&A activity.

Disclaimer, Background, and Motivation

This article shall help entrepreneurs and executives in the textile service sector better understand what is happening in the industry and create a basis for discussion.

I try to analyze the figures, data, and facts objectively. Since I have been active in the industry for more than 30 years as an executive, entrepreneur, and now management consultant and have been involved in M&A transactions and have conducted one myself, I have experience on the one hand and also my own opinion.

My personal experience in M&A:

  • 1998: Part of the team in selling FDR Services (New York) to TARTAN Textile Services. FDR had $20 million in sales and about 1,000 employees. As assistant to the CFO, my task was to prepare the figures for the transaction and assist in drafting and negotiating the purchase agreement.
  • 2008: Purchase of Umlauft Texilservice with € 12 million turnover and two plants, including the post-merger integration process management. Overall, the transaction was very successful, and the turnover of Umlauft had increased to € 18 million within ten years.

Furthermore, I have been analyzing corporate acquisitions in the industry very intensively for more than 30 years now. I know many of the acquired companies and have observed the long-term performance of these transactions - whereby my observations primarily relate to Europe and here in particular to Germany and Austria.

As for the basics, I had the privilege to take an excellent course in corporate finance at the University of Toronto. I graduated with an A+ as one of the top 2 in the class. So I am very familiar with the analysis of annual reports.

However, my analysis and opinions in this article are also very subjective, and everyone should form their own opinion.

There is also no guarantee for the processing of the figures. Therefore, this article is not written for investors and is no buy/sell recommendation for Elis Group shares or bonds. I am neither "long" nor "short" invested in Elis SA and have no other financial interests.

Furthermore, I appreciate the strengths and the abilities of Elis and the management of Elis. But I do not hold back with critical views because this is important for a discussion and learning from experience. 

Therefore, this article should not be understood as "Elis-bashing", but I also want to bring topics to the point. Thus, the content also has rough edges ... and that I am critical of the Elis M&A process is no secret.  After all, you can consider this blog post as an opinion piece.

Sources and Excel file

All Elis data originates from the annual reports. You can find all the information on the Elis website:  LINK

You are welcome to access the Excel file with all transactions in the Leanlaundry member area. There is also a ZIP file with the extracts from the annual reports here (saves a lot of work). This is a service for subscribers to the Newsletter.

As mentioned above, I cannot rule out errors in the analysis and am happy to receive comments.

Low success due to M&A - The Reason for Mediocre Stock Performance?

Elis SA Service Group - Is the M&A Prozess the Cause of Underperformance?

Elis SA Service Group - Is the M&A Prozess the Cause of Underperformance?

This chart compares Elis with the index of companies in Europe of comparable size. Elis is also a component of the index. The index is up 15%, and Elis is down 23%.

In 2017 and 2018, investors were very enthusiastic about Elis' consolidation power in the laundry industry. Even before the pandemic, disillusionment set in.

Therefore, the question is: is the inability to finance the M&A out of free cash flow a primary reason for the share price development in recent years?

How Capable is Elis SA to Consolidate the Industry with M&A?

The Reality: Berendsen in Europe was the Only Consolidation Success ...

If you exclude Berendsen as a particular case, Elis SA buys on average € 50 million of revenue in Europe per year (€ 500,000,000 in 10 years). Including Berendsen, it is an average of € 180 million in sales per year.

The European market in textile services is estimated at around € 12 billion, giving Elis SA a 25% market share.

A conservative assumption is that the market grows by 2-3% each year (general GDP growth plus outsourcing). Therefore, the market growth is € 250-400 million p.a. Elis SA needs to grow € 50-100 million every year to maintain the current market share.

Since Elis Services Group's de facto organic growth has been meager over the last ten years, Elis SA's current M&A of around € 50 million only stabilizes its current market share, and only additional M&A (like Berendsen) leads to actual consolidation. (alternatively, Elis could also start to grow organically).

The average purchase price Elis SA paid was 1.6 times sales. The regular M&A budget that Elis SA can finance from its cash flow is € 80-100 million or € 50-60 million additional sales. - i.e., any additional consolidation is not feasible without additional debt or a share issue.

Outlook: How will the M&A proceed?

Elis SA is, therefore, one of the leading players in the consolidation of the European market. Still, the actual consolidation power of Elis SA is essentially dependent on additional equity and debt.

As of March 2022, the expansion continues unabated, and with Mexico, a new country is also being developed. According to the CEO, the medium-term M&A budget is € 100 million per year and will be significantly exceeded in 2022.

Personal Assessment:

Given the moderate performance of Elis SA's share price over the last five years and the current macroeconomic situation, it is questionable whether this can and will continue at the same pace. I expect significant challenges in refinancing starting in the following months or 1-3 years. In this case, Elis SA will have to slow down its activity.

As of March 2022:

  • Elis' Bond is now already yielding 3.08%, and if we actually slip into a recession (which is currently very likely), refinancing costs can quickly raise to 5%, 7%, or even 10%.
  • Every percent higher interest rate is € 30-35 million more financing costs for Elis. In my estimation, 3-4% higher interest rates will massively slow down the M&A process.
  • Elis SA needs to refinance over € 1,000 million in 2022. (2 bonds will mature in 2023, and the purchase price for Mexico). It will be interesting to see what terms Elis will get.
  • Elis is not "investment grade" with a rating of "BB+" from Standard & Poors, i.e., one of the better "High Yield Bonds." This market is currently severely impacted by the Ukraine crisis. This situation does not have to persist but may also worsen in the event of a recession. Thus, the future of Elis' M&A is by "Putin's and ECB's grace."

But - as with Berendsen - Elis is always good for a surprise. And things might turn out better.

What companies does Elis Service Group buy?

The answer to the question is simple: virtually any laundry that makes a good profit and small companies for pest control in France and more and more countries.

In der Auflistung der Firmen sind praktisch keine richtigen Sanierungsfälle dabei und das durchschnittliche (etwas geschönte) Betriebsergebnis "Operating Margin" beträgt 12%.  Elis SA hat offensichtlich kein Interesse die eigene Marge zu reduzieren, indem man günstig Unternehmen mit schlechten Margen kauft.  Lieber wird gutes Geld für gute Unternehmen bezahlt.

Elis SA Service Group M&A Activity During the Pandemic

Elis SA Service Group M&A Activity During the Pandemic

Elis SA Service Group M&A by Sector

Elis SA Service Group M&A by Sector

There are practically no real restructuring cases in the list of companies, and the average (somewhat embellished) operating margin is 12%. Elis SA is not interested in reducing its margin by buying cheap companies with poor margins. It prefers to pay good money for good companies.

Even in the pandemic period, Elis SA also bought hotel laundries. One might have thought that the pandemic would have led to a focus on industry, commerce, and healthcare - this is not evident.

50% of the transactions are laundries and pest control companies with less than € 3 million in revenue, and the rest are - with few exceptions - up to € 40 million in revenue.

The strategy is first to buy the market leader in one country and then constantly expand the market share with many small and medium-sized transactions ("Bolt-on Acquisitions"). This process has no end because smaller companies are still being bought even in markets dominated by Elis (e.g., France).

Subscribers of my Newsletter get access to the Excel file on request.

Elis Service Group in Germany

Elis SA Service Group M&A in Germany

Elis SA Service Group M&A in Germany

In Germany, Elis SA is primarily a significant player in the healthcare sector and, according to its figures, generates sales of € 391 million. Thus, Elis SA has an estimated 12% market share in Germany - and is not #1, but "only" one of the major players on the market.

The € 391 sales correspond to around € 350 m sales of the acquired companies, i.e., Elis SA is likely to have achieved about 11% organic sales growth, including price adjustments in the average three years. Thus, organic growth is in the green zone at an estimated 3% per year.

Elis SA paid around € 480 million for these € 350 sales. (The Berendsen is split according to sales).

Except for Berendsen, the purchase price was 70%-90% of sales (Another exception was Kress and Zischka with an average of 1.4 times sales). Unfortunately, no EBITDA or EBIT factors are published.

Therefore, the purchase price is significantly lower than e.g. in South America, Switzerland, and Russia ... This may be due to the intense competition and thus lower profitability in Germany.

Elis Service Group in Switzerland

In contrast to Germany, I have little insight into the transactions in Switzerland.

Here is the list of all M&A activities in Switzerland:

Elis SA Service Group M&A in Switzerland

Elis SA Service Group M&A in Switzerland

Purchase of Berendsen

In 2016, the Berendsen board made the mistake of overreacting to the investment backlog in England by announcing an enormous investment program. In doing so, it massively unsettled investors, and the stock price plummeted.

Elis SA seized the opportunity and made a hostile offer. The purchase was then completed in 2017. The rest is history and very well documented on the Elis SA website.

Berendsen was a perfect regional complement to Elis SA. There was probably little change in the customers and employees because on the one hand they were already used to a group before and there was also little need to make extreme changes here.

But whether Elis SA brings real added value to the ex-Berendsen operations is worth a separate analysis. It is at least not obvious since Berendsen also had very professional management.

How much is Elis SA Paying for These Purchases? Are They Overpriced?

We can assume that the purchase price is determined with the Discounted Free Cash Flow Method or EBITDA and EBIT factors. 

The purchase price of individual companies is transparent only if only one company was purchased in a country in a given year. The EBITDA, the operating margin, and the annual profit are only reported in total for each year.

The average of all 139 transactions is as follows:

  1. Sales-Multiple: 1.6 
  2. EBITDA-Multiple: 6,1 
  3. Operating Margin-Multiple = 14
  4. Net-Income-Multiple = 28 

Overall, therefore, the purchase prices can be regarded as high. These high valuations also result in high goodwill in the balance sheet of Elis SA.

The purchase prices in Latin America appear to be highly inflated. The reason may be that the favorable refinancing costs in the eurozone tempt high offers.

Personal assessment (March 2022):

  • The cost of capital is increasingly rising, and, at the same time, growth expectations are declining.
  • Accordingly, current valuations in the sector will soon no longer be sustainable and will decline.
  • It also cannot be ruled out that the market for laundry companies will be a classic buyer's market. This was already the case around 2005-2010 when the market had completely turned around. Around 2000 a seller could choose from many buyers (Berendsen, Haniel, Initial were all aggressive.) After 2008 there was a complete lull, and even before that, the market was much quieter.

Elis Group Grows Only Through M&A

Elis SA Service Group Revenue compared with the Impact of M&A Activity

Elis SA Service Group Revenue compared with the Impact of M&A Activity

A highly simplified calculation:

  • € 1.1 billion sales of Elis SA in 2012
  • + € 2.1 billion sales of all acquired companies by 2021
  • = € 3.2 billion sales excluding organic growth, currency fluctuations, price increases, etc.
  • Actual sales in 2021: € 3.05 billion

i.e., Elis SA's sales are currently € 150 million lower than the sum of the original sales plus all acquisitions.

*** IF THERE IS A MISTAKE IN MY CALCULATON, I AM HAPPY TO REDACT IT *** (I have checked it several times)

If one would assume a growth like the GDP in Europe (yellow line), then the actual sales of Elis SA is EVERY year below the purchased sales.

This allows us to make the following somewhat abbreviated statements:

  • In total, Elis SA seems to grow only through M&A activity or
  • due to customer losses, low pricing and/or currency fluctuations, the entire organic growth is again leveled out.

In detail, the moderate growth may have the following reasons:

  1. Calculation error on my part. I am ready to correct it immediately. Everyone is welcome to view the original Excel file.
  2. Poor development of the overall market. A general stagnation or decline of the market can be ruled out for the pre-pandemic period; the textile service market is growing 2-3% above GDP as there is still a trend towards outsourcing.
    Of course, the pandemic hit textile services particularly hard, especially in the hospitality sector, and the overall market has slumped more than GDP has declined.
    Good companies in the sector manage long-term growth averaging 5-8% per year above inflation.
  3. Approximately € 90 million sales were bought in 10 years with small transactions and reported as "organic." Small transactions under €3m internationally and €5m in France are considered organic sales by Elis' definition. However, in my table, it is listed as M&A (just as Elis reports it under M&A).
  4. Currency fluctuations. Probably between € 100-150 million reduced sales overall due to the appreciation of the Euro, especially against currencies in Latin America. Exchange rate fluctuations are neither good nor bad … as long as you have not paid too much at the purchase price.
  5. Customer losses after company acquisitions.
    That this happens is a fact. However, it is difficult to quantify the magnitude; most losses occur within 2-5 years.
  6. General churn-rate. Elis reports issues with churn-rate in England (which have been improved). Unfortunately, there has been no group-wide data over many years.
  7. Price development. It is difficult to understand how the price level of the service develops, as - to my knowledge - no total volumes (e.g. kg) are reported. Due to the stable margins, it can be assumed that the price level is sound overall.
  8. According to my observation, a lack of sales success can be ruled out. New contracts are being signed, and one can assume that the sales success of Elis is at least average - probably above average. But unfortunately, the numbers are missing here as well.
  9. Substitution on a larger scale can also be ruled out. There is always a back and forth as to whether a customer purchases individual items made of textile or paper or whether one completely dispenses with tablecloths, for example. On the whole, the market is (currently) very stable. Furthermore, Elis also supplies merchandise.
  10. Impact of the pandemic. The decline and recovery of volume in the hotel segment is reported as organic growth and does not make the analysis of the real market success any easier.
  11. Impact of inflation. Inflation was extremely low in Europe until recently, but inflation in South America was significant. Rising prices are also reported as organic growth - so, especially the growth rates in South America and now in 2022, in general, need to be corrected.
  12. Any other reasons I missed - please comment.

"It is as it is," a wise person once said. What precisely the reasons are is challenging to comprehend as an outsider.

Surprising: Elis SA Does not Manage to Generate Added Value.

The result of the following calculation was very surprising for me. 

Normally, the operating result from the M&A process should look like this: 1+1=2.5 
In this calculation, the buyer would have generated 0.5 added value.

However, the reality is:

  • Operating Income 2012: € 224 million.
  • + Operating Income of all acquisitions of the last 10 years until 2019: € 239 million.
  • = € 463 million
  • The actual Operating Income in 2019 (before the pandemic) is € 442 million.

Thus, the operating result of Elis SA is lower than the operating result of all purchased companies.

Therefore, the formula of Elis is 1+1=1.95

Elis SA Service Group Comparison Operating Margin w/ Impact of M&A

Elis SA Service Group Comparison Operating Margin w/ Impact of M&A

If we assume an increase of only 2% in operating profit, the difference increases to around €60 million, and the operating profit in 2022 would have to be more than €550 million.

Not a good deal.

Challenges for M&A in the Textile Service Industry

M&A in Textile Rental has particular challenges:

Item List Harmonization

Almost certainly, the item list (SKU's) of the purchased company is not the same item list of the buyer (e.g., Elis).

This challenge leaves you with almost exclusively bad options:

  1. Scrap Old Texiles and Refit Customers.
    Replacing all linen is massive capital destruction and would cost 40-80% of the purchased sales. Therefore, this is only an option for C-items.
  2. Mixed Delivery of Old SKU's and New SKU's
    This item changeover "on the fly" is possible only for a few items without compromising the service to the customer. It is the cheapest method but also the most significant risk of losing customers.
  3. Use up the Textiles at Some Customers
    Continue to use old items on some customers and restock new customers and some existing customers. This method sounds quite simple, but in practice, it is complex. For the production, the number of SKU's doubles, the current customers with the old items receive a constantly decreasing quality, and the field and office staff must administer this process over 3-5 years.
    You end up discarding quite some linen anyway.
  4. Continue the Item List of the Acquired Company
    Continuing with the current item list is very easy for large corporate buyouts (e.g., Berendsen) since harmonizing the SKU's does not bring such large additional economies of scale.
    In the case of small and medium-sized acquisitions, it is practically impossible to pay 10-30% more for these items in purchasing.

Complex Post-Merger Integration

The integration of a purchased company is complex almost, regardless of its size. The software, master data, etc., must be coordinated. The service portfolio, contract design, etc. must be harmonized.

If you do not proceed carefully, you will have burned out many customers and key employees.

Good Companies are Rare ... and the Price is Very High!

Unlike the hotel industry, there are far fewer good laundries to buy. These good companies have a very high market share locally, excellent profit margins, and are very expensive.

The danger, therefore, is that all the added value from the transaction goes to the buyer by paying too high a purchase price. While this is laudable, in this case, it does not add value to the shareholders of Elis SA.

Different Corporate Cultures

Small and medium-sized laundry companies define themselves as being the opposite of a corporation. They respond very individually to customer requests, are often available 24 hours a day on the cell phone for customers and employees, etc.

A corporation has to professionalize these structures and processes and thus risk losing many customers and employees.

Often, new management is then also necessary because the owners leave and with them many family members and friends. Finding good management in a laundry is a unique challenge!

I have heard the following statements from customers (not just Elis): "I changed from a corporation to a family-owned laundry X because I did not want to be served by a corporation. Now the corporation has bought family-owned laundry X! I'll probably have to switch again."

Deferred Investments, Unknown Risks

When an entrepreneur sells, this has often been decided several years earlier. As a result, there is often insufficient investment in machinery, and an investment backlog arises that can quickly amount to 10-20% of sales.

Furthermore, it is difficult to judge as an outsider how high the actual risks are in the market. During the due diligence, you only see the expiration dates of various contracts, but the real story behind the market position is only known by the seller.

Is it Meaningful for Elis Service Group to Buy Small