Behind the 8 ball or in front of it?
Have you made any mistakes lately? Did you try something different and it didn’t quite work out the way you had planned? Do you keep testing new ideas in the business and your piece count is at least holding steady? Or, have you just held the status quo with no unexpected bumps in the road, but lower piece counts and a tight cash flow haunts you?
Now if you’re in front of the 8 ball, and trying something new, odds are that you might get run over by your own naivete, or from consequences not thought through or trying ideas that are just too early to be successful.
On the other hand, if you’re behind the 8 ball, the ball that represents growth, speed, and profits, it can get so far ahead of you that there’s no way to catch it. It keeps moving forward and leaves everyone not playing the game at that speed behind.
These choices are, in fact, mutually exclusive. Enough of the pool playing metaphor. We can see how this works by looking at real historical activities.
Nearly every drycleaning operation has some form of retail route system today and you probably find the market very crowded because, as said, every operation is trying it.
Why is it so hard? Because the new style retail routes began in 1980, not 1990, not 2000 and certainly not last year.
I can tell you that the routes, which began in the 1980s, were laughed at. We were told that they wouldn’t work. After all, routes used to work in the 1950s, but died and they won’t work today Yet after some spits and starts, they started to work
Then we were told that routes might work, but you can’t make money with them. Plants and even dry stores are much more profitable.
Then these early operators started to grow their profitability, far beyond those with just plants and dry stores. Then we were told that the growth in routes would hurt the growth of store front counters, but store front counters grew even faster.
And when all was said and done, other operators took what they had learned from the early innovators, copied and improved them and grew their own routes.
All of these innovations occurred nearly 30 years ago and those same operators still have some of the largest retail route operations in the country.
Today, sometimes out of desperation, sometimes by seeing the success of your competitors, others start to initiate routes. They generally find it a difficult road and often compete on price just like adding a new store too close to a competitor. You’re guaranteed at getting something, but making it profitable will depend on your tenacity and the failures of your competition. You might say you are 30 years behind the 8 ball.
There have been other innovations in the drycleaning industry. Again, there are the leaders and then there the followers.
Long performed in other industries, bar coding was first considered in 1992 in an IDC speech where I outlined the possibility of bar codes the size of the back of a bumblebee on all garments. Even though it was available back then in other industries, people laughed.
Then we saw bar coding on shirts. Not surprisingly, this was first initiated from some of the same operators who had initiated large retail route operations. Following slowly behind we found automated and semi-automatic assembly systems using barcoding.
Even slower, we’ve seen bar coding on the drycleaning side. Lots of money invested, but what do you get in return as an innovator?
Interestingly enough, for the first time in this industry, we experienced clear, measurable and substantial increases in productivity, which has been tracked for over 50 years.
Within 10 years of implementing bar coding and related production efficiencies, operators improved their productive labor by over 33 percent. This means that if your processing labor, including cleaning, pressing, assembly, and bagging was 12 pieces per hour, it grew to over 16 pieces an hour.
Where these productivity results are true, the real cost structure of a company is now very different from its competitors. Pricing can be cut without hurting profits. Marketing can increase with improved cash flow and continue to grow market share. All sorts of opportunities abound.
What does this mean if you’re late to the game? As usual, the 8 ball is running away. You can certainly match the cost structure, but for every day you’re late, the competition has been able to use their lower cost structure to their competitive advantage. Being late to this party is not a pretty picture.
How to get started
The original route operators started their trials because something fell into their lap. There was an unused truck, there was a talkative employee who liked to work outside of the plant, there was a customer that they didn’t want to lose, but needed delivery service.
These were small frustrations that could have been ignored, but weren’t. They were turned into opportunities.
There was also a resolve to see it through, solve problems as they emerged due to the growth or failed trials. Even great success caused growing pains.
These people were the true innovators. They stayed ahead of the 8 ball and even as retail routes have matured, many of them have moved to other areas of innovation to continue to grow and prosper.
Can you play catch up? Yes, there are always opportunities. For instance, those companies that invested in lowering their labor costs but didn’t capture market share with the available cash flow provide an opportunity for their competitors to take advantage of the environment.
It’s an old story that you can’t stand still. You either go backwards or forwards, but there is no such thing as standing still.
How do you begin to get in front of the 8 ball if you choose?
Open yourself up to new ideas, crazy ideas, silly ideas, and then sit back and try to understand what might happen if those ideas really succeeded. What would that mean to you?
Jeff Bezos of Amazon had an idea of selling products over the Internet without a single brick and mortar building. How silly was that? Today it’s the largest online seller in the world. It didn’t happen fast, it didn’t happen without struggles or courage.
Even on a small scale, the same can and does happen ever day in this industry. Be alert. Try new things.
Could I tell you what the next innovation is for this industry? Yes, but you wouldn’t believe me. There are plenty of hints in the marketplace if you talk to your customers and understand their wants and needs. Those that are alert to change will see, sense, and be game to take advantage of what they learn.
Deborah Rechnitz has been an independent management consultant to drycleaning industry members since 1980. She also held the position of chief operating officer of one of the largest USA drycleaning operations in 2008. She holds a Bachelor of Science degree in Finance and Personnel Administration; a Bachelor of Arts degree in Interpersonal Com-
munications; and an MBA in Operations Management from Case Western Reserve University. She can be reached by e-mail at email@example.com or phone at (253) 405-7043.