In the laundry industry, textiles are assets. We know how difficult (if not impossible) it is to have an economic approach without the proper tools to calculate the Return on Investment (ROI) for textile items.
We have explained in the past posts how RFID works for laundry management, how it enables full and transparent monitoring and reporting. Following-up on that, let’s analyze together the economic principles of how RFID is enabling a superior Return on Investment in textile items and in professional laundry services, respectively.
Regardless of who owns the linen (the hotel or the launderer), there is always an investment in the stock of linen. Thus, the cost of this investment (and subsequently the return on it for the investor) will be part of the overall cost of linen management and laundry service, impacting both the hotel and the launderer.
What influences the ROI?
There are 2 main elements influencing the ROI: 1. the investment in the linen stock and 2. the exploitation of the linen stock with the associated revenues and costs. RFID-enabled laundry management has a positive impact on both of them:
- As it enables full monitoring of all items, RFID gives real-time information about the usage level of the linen. This means it gives the information to optimally plan a future investment in linen stock: when to make the investment (anticipating the future need is crucial); what to invest in (maybe not all the stock needs replacement, but only certain types of linen); how much stock volume to invest in (monitoring of historic data gives information about the needed stock level). A properly planned investment means time to choose proper suppliers, time to negotiate better quality and cost conditions – Ultimately a lower investment cost and a superior value for money.
- The same full monitoring of all items means that RFID gives control over the uniform use rotation of linen and subsequently allows to extend the lifetime of the entire linen stock. Maximizing the lifetime of the linen and thus, the revenues they generate positively impact the ROI of the linen stock.
Regardless of who owns the investment, superior ROI has a positive effect on both the hotel and the launderer. Superior financial stability for both partners is ultimately very important for a long term relationship, which should typically be a common practice in the laundry industry.
Regardless of the laundry management model (full rental, own linen with outsourced laundry service, own linen with in-house laundry), there is a need for an economic approach, for being able to calculate, to compare and ultimately, to make better decisions. However, the real data needed for this is missing.
RFID is a tool that enables a real economic approach, by providing the needed data. A laundry company can call this new RFID-enabled benefit – superior return on investment. The hotel may call it simply –freedom to focus on the main business.
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