The unknown unknowns that could affect your bottom line
Brian Gamble is among the nation’s foremost experts in the uniform and industrial laundering industry. Having spent twenty years serving in the industry as a Route Driver, Route Manager, Branch Manager, Sales Manager, General Manager, and Group Manager over a significant number of plants and branches, he resigned as a Regional Vice President in 2012 to join the Fine Tune team. Brian’s experience includes multiple acquisition events at nearly every level of his tenure. He sat down with us to answer a few questions about the largest acquisition in this industry to date.
How will this transition affect the uniform industry as a whole?
In all likelihood, if you are a G&K OR a Cintas customer, the answer is significantly. Imagine if you purchased a billion-dollar company in your industry. How do you think that would affect your ability to provide adequate customer service? As with most businesses in 2017, employee headcount is already lean in this industry. This acquisition likely comes with further reductions in workforce. Individuals at every level who are already overworked will be asked to do even more. Some tasks will be overlooked while others will be performed with less accuracy. An already complex and often frustrating service just became more difficult to manage and deliver. The net result of this acquisition is that service will suffer for all Cintas and G&K customers. But there are also significant ramifications for non-Cintas or G&K customers. The industry’s viable national supplier base just shrank from four to three. Customers throughout the industry should be prepared for escalating costs, as the remaining suppliers attempt to capitalize on this less competitive landscape. This is true in all markets around the country, but particularly so in markets where one of the three remaining national suppliers is either not viable or is only marginally viable by virtue of having only a branch presence. There will be many parts of the country where it’s a challenge to find more than a couple of “good” options.
How will this acquisition affect end users at the local level on a day to day basis?
If you’re a G&K customer, there’s a very high probability that the people you most frequently deal with will either leave, turnover or be reassigned. Even if you’re a Cintas customer the same will be true for the people you most frequently deal with. Turnover events tend to cause service disruptions – you may have caught a glimpse of this reality in the past when your service representatives turned over or even just took vacation. All the behind-the-scenes folks, office staff and plant level personnel – who are usually focused on servicing your account – are now focused on all sorts of tasks associated with the acquisition. Your weekly service representative will not have the usual support required to service your account. Your folks will likely experience garment shortages, slower responses to repairs/size changes, and longer lead times for new hires – which will surely create headaches as your folks devote more time to combat these issues.
Tell us more about the tasks related to the acquisition. What do you mean by that?
Just to start with one massive task, every single garment currently in service among G&K customers will almost surely, at some point, need to be re-tagged. This process creates thousands upon thousands of opportunities for errors which will affect your service. Even Cintas customers will see a very significant number of their garments re-tagged, as routes are reshuffled in the integration process. There are comparable challenges in nearly every area of the merging organizations.
Give us an example of another area that’s affected.
Billing. Uniform suppliers have never been able to agree on billing methodologies. In fact, G&K and Cintas have historically defined the term “inventory” differently. As G&K customers are ultimately converted over to Cintas billing, discrepancies are inevitable and predictably those discrepancies will not lean in the customer’s favor. In fact, it’s likely you’ll find your total costs have increased. In addition, the invoice and payment process in effect with G&K will change over to Cintas. You will have to setup a new PO, ensure your current payment terms are honored, and understand how to read a new invoice.
What’s your overall advice to G&K and Cintas customers right now?
First I would say, this is an expense that frequently flies below the radar, but if ever there’s a time you should be seriously evaluating the expense and where you stand in the marketplace, this would be that time. Second, I would recommend a sober assessment of how much expertise you and your team actually have regarding the ins and outs of the uniform industry. It’s a complex expense and even for the sharpest buyers in the smartest organizations, the “unknown unknowns” always seem to burn the bottom line. Unless you truly have the sort of insider knowledge that very few organizations actually possess, I’d recommend giving us a call at Fine Tune. We know this stuff inside and out.
Please let us know how we can help you with any questions you might have about how you can Fine Tune your process.