Uniform Rental Services

InsightsUniform Rental ServicesExpert Q&A: Cleanroom Uniform Services

Expert Q&A: Cleanroom Uniform Services

Lindsay CallNovember 12, 2019Read time: 14 min

We recently caught up with Lindsay Call, Fine Tune’s General Manager, on why cleanroom uniform programs can be a particularly challenging expense.

Q: What makes cleanroom laundering expenses so challenging to manage?

A: Well, the answer—like the expense—is complex.

To start at the beginning, if you’re a buyer who has inherited this expense and you’re trying to figure out how to improve your situation, there’s a high probability that your starting point entails some significant challenges.

For one, you’re not the only voice regarding this expense, and you may not be the leading influencer when it comes to making decisions.

Operators and QC folks are going to have quite a bit of sway in this area and they probably had a great deal of influence in putting together the program and contract you’ve inherited.

They also play the leading roles in managing the expense on an ongoing basis, and all of this tends to mean that cost management has taken a back seat to other priorities.

The reason it’s taken a back seat is because concerns over things like quality and avoiding a shut-down are such substantial concerns—and legitimately so, by the way—that your operators tend to focus whatever attention they have for this expense on avoiding worst-case scenarios. This tends to come at a cost with respect to managing the bottom line.

This fear of worst-case presents opportunities for vendors to play on those fears and extract way more money from your account than needs to be spent.

Basically, it means you wind up with more product than you need in general, and certain products that you may not need at all. And this has a two-fold impact on your business.

First, your run-rate is higher than it should be, typically anywhere from 20-50 percent higher than it should be in cleanroom accounts.

And second, your liabilities at the end of your contract are way higher than they should be, because in cleanroom accounts, the products on your invoices all tend to carry substantial back-end liability.

Q: Tell me more about these back-end liabilities—what do you mean by that?

A: Well, cleanroom contracts tend to carry extremely onerous rules relating to the return of merchandise at end-of-contract, specifically with respect to the condition—or “grading standard”—of the merchandise at that time.

For a typical cleanroom account to change suppliers—even after honoring the full term of their agreement—it tends to entail parting-of-ways costs amounting to somewhere between four- and six-months’ worth of account spend. This often leaves a buyer approaching end-of-term feeling trapped.

We have seen many clients who decided that they didn’t really care for their incumbent supplier, or in a perfect world would like to switch, but the hundreds of thousands of dollars or even millions of dollars of back-end liabilities in their contract prevented them from behaving like the free agents they wanted to be in the marketplace. As a result, they ended up feeling as though they were trapped with their supplier.

Q: What are some of the other challenges?

A: Well, so many of the challenges of this expense revolve around areas that are difficult if not impossible to control at the contractual level.

Not to suggest that the contracts aren’t important, but especially with cleanroom programs, all a good contract does is set you up for success. It is very easy to simultaneously have a good contract and a bad deal.

The reasons for this are all the discretionary aspects of your program that are in the hands of some combination of your supplier and your field-level operators.

Q: What are these discretionary aspects you’re speaking of?

A: The big ones are inventory and loss and ruin—or damage—charges.

Each of these areas is really hard to manage unless you have the resources to be deeply engaged in this expense on a week-to-week basis.

Inventory is particularly hard to manage in cleanroom programs because you frequently have parts of your inventory in as many as four separate places at the same time—on your people, in your locker room, in the supplier’s plant, and in transit.

It’s hard to expect non-insiders to know how to reconcile programs with that level of complexity, let alone stay on top of them on a continuous basis.

Loss and damage are similarly tricky, and I suppose the common thread here is that your supplier benefits from expanding inventory and high rates of loss and ruin charges, and of course these both hurt your bottom line.

Q: What would you say to someone who is dealing with those discretionary challenges?

A: If you are responsible for your company’s cleanroom uniform program, the odds are that even if you knew everything that needed to be done to get your program to optimal cost levels, you still wouldn’t be able to do it.

It’s just one of the hard facts of the expense; it is an expense that involves onerous, multi-year contracts, and products that carry significant back-end liabilities. So, even if you know where you should be—what optimal market cost levels truly are for your account—you’re hamstrung in getting there because of the liabilities that you own.

Q: How do you overcome those liabilities to get to successful outcomes? What do you need to get there?

A: Well, to put it bluntly, you need leverage and you need to find the leverage points—things that you have going in your favor with respect to your supplier so that you can get what you want.

That’s where our attention goes very frequently in the early stages of a client engagement in the cleanroom space.

Q: Where are the areas in which your clients likely have leverage—even if it’s leverage they don’t know about?

A: With industrial accounts such as food processing accounts, automotive accounts and the like—more standard uniform industry accounts—we’re certainly looking for contract compliance, but we are also looking for more grey area practices that, while they may technically be compliant with the governing contract, do not necessarily reflect the sorts of behaviors that any cost-conscious customer would be ok with.

This is true of cleanroom as well but it’s probably even more so the case that the leverage points existing in your program today do not involve, for example, getting charged the wrong price for your cleanroom frocks or lab coats.

More likely, they involve more complex areas of your program.

Every account has its own unique complexities and Fine Tune digs in to understand those and get to the truth, and then discuss the truth with our client and try to figure out if that truth reflects well on the supplier.

If it does, that’s great—there’s no leverage in that situation but the good news is you’ve got a good supplier that is dealing with you as a good partner. If the truth doesn’t reflect well on the supplier, we’ll discuss it and figure out how to use those discoveries to advance our client’s interests.

Q: What’s an example of a complex area within a cleanroom account?

A: The biggest I would say is inventory.

There are two questions we are always asking in an account when it comes to inventory – Does my client have what the invoice says they have? And are they using what they actually have?

Usually the answer to both questions is “no.” In cleanroom accounts, it’s even more likely that the answer is “no.”

We discussed earlier how much more difficult it is to reconcile inventory in cleanroom uniform programs than it is in more straightforward account types.

For example, an auto body shop has a delivery driver who brings in five shirts and pants and picks up five shirts and pants each week, while there’s one pair that an employee is wearing on the service day. That’s a pretty easy inventory to track.

In a large cleanroom environment, however, it’s typically bulk product, not assigned to individuals. At any given time, some of the product is on shelves at the customer location, some is at the supplier location, some is being worn, and some is in transit— potentially in the air— en route to, or from, the customer location. So, reconciliation of a cleanroom account is really challenging.

Q: What are some of those inventory reconciliation challenges?

A: Well, to back up a bit, we always like to understand what sort of math and logic was used to arrive at inventories in the first place.

There tend to be flaws in those processes that we can help repair. But then of course we do want to validate the account is actually receiving what the invoices suggest it should be receiving.

And while this can theoretically be done with a scanned inventory, there are flies in the ointment in that process, and in many instances, a physical inventory reconciliation is what’s really needed.

Now, to accomplish an accurate physical reconciliation requires putting several people in the right places at the right time and doing a lot of counting. It’s a sophisticated process—one that we do undertake on behalf of our clients—but it’s hard for me to imagine non-industry insiders having much success pulling that process off. And frankly, it’s hard for me to imagine most of our clients justifying the deployment of resources required for that kind of endeavor.

It’s an example of a perfect challenge to offload to a trusted advisor like Fine Tune.

Inventory is certainly foremost in the list of areas that we would look to for leverage. But it’s worth adding—it’s still only one of a number of areas which are critical to maintaining optimal cost levels.

Q: What else would you be looking at in a cleanroom program?

A: Grading schedules – does your contract contemplate grading schedules that determine how your supplier is supposed to decide whether or not a garment is damaged?

Q: Is that grading schedule being properly adhered to and in accordance with the words in the contract?

A: That’s frequently an area where leverage resides.

Lost product – when your inventory is reconciled—assuming it is with some frequency—how is lost product handled? How is it determined who’s responsible for the missing product? Was that missing product ever there to begin with?

This is certainly an area where we see our clients get taken advantage of with some frequency and an area where leverage can be uncovered if you know where to look.

That’s just a few examples but there are certainly a host of others.

Q: What are some of the advantages of having Fine Tune-negotiated language in a cleanroom agreement?

A: It is so often that we find ourselves immersed in a client account in the early stages of an engagement and we realize, this situation would be so different if they were already operating under our terms—the terms we would recommend they demand in their next agreement cycle.

You’ve got to get the right words in the agreement on the front end so you can enforce the behaviors that you want to see throughout the deal.

Of course, that’s never the case.

It’s hard to expect that even the smartest procurement executives would write the same language as executive-level industry insiders would.

The lay of the land that we inherit in any given client account is never quite what we’d ideally want, but the truth is that the terms are critical.

There are certain behaviors and practices we uncover all the time where our reaction is: “I don’t love this, but your supplier has not technically done anything wrong because you didn’t negotiate this area of the deal properly. Going forward we can set ourselves up for success by injecting the right terms into the next agreement and then holding the supplier accountable to living up to those terms throughout that next agreement.”

The common thread through a lot of this is that you’ve got to get the right words in the agreement on the front end so you can enforce the behaviors that you want to see throughout the deal.

Q: What else is involved in the set-up and management of an optimized cleanroom program?

A: Writing the right language with respect to end-of-contract protocol that contemplates the condition your merchandise is expected to be in on the back end, that contemplates inventory reconciliation and how those are to be done, and that contemplates protocol for lost and damaged merchandise.

These are all pieces of the equation, and we’ve come up with some really useful and outside-the-box language for all of these areas that tend to dramatically shift the playing field to our client's advantage.

But—and this is critical—even if you get all of that in place, it will all break down if you don’t couple it with dedicated and vigilant management and enforcement of the deal right up to its end.

You’ll find out that your missteps from two years ago are costing you hundreds of thousands of dollars on the back-end because you didn’t properly document a certain situation, or you can’t prove whose fault it was that thousands of items appearing on your invoices are no longer actually in your account.

Without dedicated and vigilant management, you overspend along the way and you overspend again at the back end of the deal because, as you come to realize, you haven’t been on the ball throughout the term.

And this is where educating and coaching local contacts on how the expense is supposed to work and what they can and should expect from their vendors is critical. And of course, this is an ongoing task as field contacts turn over.

This all gets back to why we call this whole industry a “nuisance expense.” Because the truth is it’s just so complex that to effectively manage the expense requires more time than it’s worth in most purchasing environments.

Most of our clients just don’t carry enough in the way of procurement department resources to justify the kind of deep-dive management required to really be on top of an expense this complex and constant in its challenges.

Lindsay Call Headshot

Lindsay Call

Executive Vice President

Lindsay’s tenure with Fine Tune began with an internship while studying at Indiana University in early 2005. Upon her graduation, she moved to Fine Tune’s Chicago headquarters to help grow its first target category, Uniform Rental. Since then, Lindsay has served multiple roles across many functions, launched five new target categories, and has advanced to become an invaluable executive. Today, Lindsay manages North American operations, designing and implementing business processes that serve both Fine Tune and its diverse client portfolio. In addition to these duties, she serves an integral role in the ongoing development of Fine Tune’s proprietary software, eMOATSM.

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