April 14, 2024

Illuzzi Letter

Envisioning And Creating Your Dream Home

Textile Processing Cost Benchmarks

In the laundry processing business, many facilities fail because they cannot manage to meet simple processing cost benchmarks. Others have difficulties making decisions or justifying upgrades because they do not understand these benchmarks. Up until recently, little effort had been put into consolidating the necessary data into understandable terms that facility managers and executives will be able to put into practice. Fortunately, there is now a comprehensive study available that aims to do just that.

Cost per Pound (Processed and Delivered)
The study, compiled by American Laundry News, forecasts that laundries will reach an average per pound cost of $1.10 in 2013. However, that number is not reflected in the study as data was only available through 2011. The cost per pound (processed and delivered) for the study ranged from $0.78 to $1.05.

Processing and Production Benchmarks
Within that $0.78 to $1.05 per pound cost are several different aspects that must be accounted for, including processing and production. For an efficient facility, the study determined that these costs should be between 48 and 69 cents per pound. Here is how those benchmarks break down ideally:

  • Processing cost: this is the direct cost of labor and the benefits associated with hiring and maintaining labor (e.g. health insurance, retirement pensions, etc). This should be between 18-23 cents per pound processed.
  • Administrative costs: the costs of non-production employees and management. This should be around 3-5 cents per processed pound and delivered.
  • Maintenance and repairs: the costs associated with labor and materials needed for routine maintenance. This should be around 7-11 cents per lb. processed and delivered.
  • Equipment depreciation: obtain this by dividing the equipment’s value over its lifetime (for the study, this was 15 years). This should be around 4-6 cents per pound processed.
  • Property depreciation and property taxes: 3-5 cents per lb. processed and delivered.
  • General supplies: 2-4 cents per pound processed.
  • Chemical supplies: 3-5 cents per pound processed.
  • Utilities: 8-10 cents per pound processed.

Distribution and Replacement Benchmarks
In addition to your processing and production costs, you will need to take into account the cost of distribution and replacement of textiles. The study determined that this should be roughly 30 to 36 cents per pound processed and delivered. This breaks down into two categories. Distribution and return cost, which includes drivers, fees, tolls, fuel, vehicle maintenance and repair, labor, and so forth, should cost between 13 and 15 cents per pound processed. Textile replacement cost was between 17 and 21 cents per pound.

These benchmarks were set as ideals to be reached when your facility is operating at its best. To make the most of your laundry processing business, break down your costs per processed pound and delivered, and determine where you are unacceptably outside of these benchmarks, then cut back.