Narayanan Raghavan, Director, Linen Rental Services India Pvt. Ltd
Drawing on his vast experience in providing textile rental and laundry services to the hotel sector as well as harking back to his engineering background, Narayanan Raghavan, Director, Linen Rental Services India Pvt. Ltd details practical ways in which commercial laundries can and should negotiate with customers to avoid slipping into losses in the drive to remain competitive.
Laundry as a science
Laundry is supposed to be an engineering industry as the whole process involves steam production, chemistry and textiles. Are you running the laundry with the engineering skills? Does your laundry manager understand the cost elements of running a laundry plant? Does the team managing the laundry schedule the workflows for efficient utilisation of resources and machinery?
Laundry & dry cleaning is a complex industry and needs the laundry plant running efficiently to keep the costs optimal and save the life of the textile. Unfortunately, there are no professional courses or training available to qualify the resources to handle the laundry plants.
Always L1
Customers always choose the lowest vendor without understanding the commercials of the vendor’s proposal, which in turn is vital for the survival of the business and continuity of service. Why are the big, medium and mom-and-pop laundries shutting their businesses? Price is not the only factor to be considered in any service industry.
The purchasers/buyers in the industry require a commercial understanding of the service requested before starting the comparison and negotiation process with the vendors. The benchmark prices for each commodity to be washed in the laundry plant are to be well understood and the target prices fixed accordingly. It is an advisable practice to involve the end user of the laundry service in the identification and negotiation process with the suppliers/service providers. The decision to select the service provider should be a joint objective of the purchaser and the end user.
Balancing quality and profit
Laundry is still not considered a respected service industry and given importance in the whole hospitality ecosystem. Why is it happening, where are we going wrong and what is needed to improve the service quality to keep the end user happy?
Many a times, the laundry service providers tend to offer a price that is lower than their operational costs because of many unknowns in the estimation. What should one do to offer the right price to deliver the right quality of service and keep the business alive and the customers satisfied?
A few don’ts:
- Never ever assume the prices (ASS U ME)
- Understand the scope of service and estimate the costs right
- Keep buffer for unknowns that are missed in the estimation process due to human errors
- Always keep a minimum negotiation margin of 10% in your proposal to please the customers at the negotiation table.
- Never accept the prices that the customer dictates
- Never copy the prices of competition or go lower without understanding the basis of doing the same
- Do not succumb to price pressures at any point in the negotiation process
- Price correction can only happen if the service providers price it right.
- Demand a fair price for the services you provide.