Thursday, May 15, 2008

Uniform Rental Service Employee Paid No Contract

What you need to know about Employee Paid and Negotiated Uniform Rental Programs.

The author Peter A Donovan is not affiliated with any unform rental company now, and was previously employed in the industry for 12 years negotiating rental contracts and speaks from this experience.

For the sake of mathematics, let's assume the ABC Manufacturing Company has 10 employees who pay and contract for uniform rental service, and that ABC will not payroll deduct or manage uniform service for unnamed reasons which could include overhead of management time.

What impact does this have on quality of uniforms, price, and the selection of a uniform rental firm?

To understand, you need to be "in the head" of a uniform rental company.
In a normal situation, where ABC negotiates and signs a contract, here's what happens. The uniform rental plant bidding for the business does this:
Each employee gets an inventory of 11 uniforms: 5 in the locker for M-F, 5 dirty in the plant being cleaned from last week, and 1 on the back of the employee, a "swing" garment.
Uniforms cost money. Let's just say each uniform outfit costs $75, and with 11 to purchase, that comes to $825 - not a trivial amount. They "lay it on the line" with a 3 or 5 year contract at $14.00 per week coming in per employee and give new garments to begin service. Math please! That comes to an income of 14x52 weeks = $728 per year. There is cleaning, employees to pay, trucks to maintain, and gas prices too. The normal new uniform contract takes about 1/2 the contract amount to break even. Let's not even go to "value of money over time". The uniform rental plant is in the business of long term profit and when you renew your contract for another 3 years, there's no huge overhead so there is finally some profit at the end of the tunnel.

Now, when ABC refuses to sign a contract (employees cannot) what does this do?
You have to be the uniform company on this one.
First, let's talk about the "stock room" of uniform rental plants. Every plant has a stock room full of used garments that they decide are good enough to rent but used, so they use them a replacement garments when regular uniforms are destroyed and for employees added to a contract during the contract period. When you have a sizeable stock room bulging with used uniforms, you can go after employee paid no contract accounts. $14 per week per employee still and used uniforms. Wait.

Who has uniform stock rooms bulging? When a uniform company has customers that end contracts, all the uniforms are returned to them. When a uniform company has a low quality control standard for used garments and retains all rather than RAN "replace as needed" you get the perfect mix.

If your customers are happy and don't leave, PLUS you have a high quality RAN system, you just can't bid for the ABC account, can you?

So, the impact of ABC's non-involvement does this:
1. The uniform vendor will be of the type mentioned above most likely.
2. The employees get used and pay for new.
3. AND they impact the image of the ABC company when visitors arrive.

This article is written expressly for reading by the owner of ABC, whomever you may be.

Sincerely,
Peter A Donovan
Applause Software
http://www.applausesoftware.com/

2 comments:

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Annie Johnson said...

Great posting!!! Uniforms