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The cost of miscalculating PPLH
Some industry analysts will tell you that you should be aiming for 25 shirts processed for each
and every shirt department labor hour that you buy.
This is commonly called pieces
per operator hour and generally
referred to by the acronym –
PPOH.
I adopted this method years
ago because this is the best way
for me to get a snapshot of
someone’s plant. A few decades
ago, I renamed this and now
call it PPLH. The “operator,” the “O,” sounds too much like a machine operator; a shirt presser.
I think that this led some down the wrong path. You would not call the shirt washer an
“operator,” it doesn’t sound right. But you know that the shirt washer is an employee that you
need to pay. They are working Labor hours, hence the “L.” PPLH levels the playing field.
I have no idea what that comes to in labor cost percentage. Labor cost percentage is useless
to me because I have clients all over the United States and many foreign countries that charge
between 70 cents and $27 to launder and press a shirt. The gross income, of course, radically
alters the percentage figure.
PPLH allows me to compare workflow patterns at laundries regardless of what they have to
pay for a shirt presser and regardless of what they can sell their service for. It is a good
barometer for you, too, because it will keep you from getting a tainted view of your individual
situation.
For instance, suppose you are relying upon a percentage figure and yours is higher than you’d
like or higher than that of your peers.
You may hide behind the fact that you must pay higher wages because of your community
standards or that you can’t charge enough on average because of your wholesale accounts.
In reality if using PPLH to compare, you may find that you’ve developed a highly efficient plant
or that your profit margin is being lost in inefficiency.
The biggest sin, I will prove to you, is calculating it incorrectly.
It happens to be a fact that 25 PPLH is very rarely achieved. About 95 out of every 100
cleaners that call me for advice have a PPLH of between 16 and 18. Some cleaners are below 12
PPLH.
Miscalculating PPLH makes my list of common goofs that cost you money with ease, and is
probably the biggest cause of declining profits in the industry, by far.
Let me explain, but first let’s make sure that we all understand that labor is your biggest
expense. No surprise there, right?
Still, we love to beat up our supplier for a dollar on a case of hangers.
Why? Because labor does not appear to be out of line. Everybody is working, and when there
is one person out sick, pandemonium rears its ugly head. We certainly conclude that our labor is
at rock bottom. We essentially prove it when we have a skeleton crew.
When we hear about PPLH, even before we figure out what ours is, we conclude that we are
surely within the envelope of respectability because of the very obvious fact that we have few
employees and all of them work and, in fact, work very hard. Perhaps we think that we
understand how to calculate it, but we just may second guess ourselves later.
Let me illustrate with an example. Let’s imagine a double-buck shirt unit operated by two
employees. This unit feeds two other “post-press” employees — an inspector/touch-up and an
assembly person.
They, in turn, send off completed orders to be bagged. The person who bags drycleaning does
the shirts as well. Our hypothetical plant does 2,500 shirts per week. They average 80 to 85
shirts per hour and work about 37 hours per week.
To complete the fantasy, let’s say that you’ve just returned from your local DLI affiliate’s
holiday social where they talked about PPLH and stressed 25 as a good goal in the shirt
department.
Fiddling with numbers
When you figure out yours in the manner that was explained, you are flat out floored. It
simply can’t be. Then you begin backing out certain labor hours until you have a palatable
number — one that you won’t be embarrassed to admit to your peers. The truth is that you are
lying to yourself.
Here are a few ways to improperly calculate PPLH, and then I’ll show you how to do it
correctly.
An honest PPLH number is never a spike, it is a global average. A common mistake then, is to
actually include all of the labor hours that you should but select a small window of time to
calculate it.
Let’s say that the plant that we described a minute ago has an equipment failure during the
week.
Consequently, there are still 220 shirts to do at two o’clock on Friday afternoon. Your
employees are used to going home at that time, but they hang in there and press like they have
had way too much coffee.
They finish at 4, they’ve done a good job on the shirts, and they have finished much earlier
than mathematics led you to believe at 2 p.m.
You are pumped up from a combination of too much coffee yourself, last night’s pep talk about
PPLH and the fact that your pressers finished an hour earlier than you thought that they would.
They have pressed at the rate of 110 shirts per hour. Two pressers plus two support people,
each working two hours (between 2 and 4 p.m.) for a total labor hour usage of 8.
Two hundred twenty shirts, using eight hours of labor is 27.5 PPLH (220/8 = 27.5 PPLH).
You may reason: “Hmm, 27.5 PPLH! Excellent! Nobody that I’ve talked to is doing that well.
Well, actually, I’m not doing 27.5. My pressers really kicked butt this afternoon. If they pressed
at their normal rate, I’d probably be at 25 PPLH.”
The next time that someone asks you about PPLH, you will probably tell them that you are
right at 25, maybe a hair under, “…but we do a quality shirt.” Everybody says that.  
There are so many things wrong with this all too common scenario.
• PPLH is a global average. Sighting the performance during a small window of time is
inaccurate, perhaps even meaningless. It only serves to allow you to justify clutching onto a
money-wasting system and never allows you to see the desperate need to make a serious
change.
• It is remarkably easy to calculate PPLH, but so often the accepted formula yields a truly
offensive number. The conclusion is that “you did it wrong.”
The result of that, remarkably, is to tweak the formula until its product is more like what the
guys at the meetings tell you it should be. Nothing could be more wrong. Nothing could be more
costly.
• Let’s go back to our hypothetical plant with two pressers and two other employees for a
minute.
Who washes the shirts? Who marks them in? Who packages the completed orders?
If these tasks are being done for “free,” then you and I need to have a heart to heart meeting.
“Free” labor?
Commonly, one reason is that these chores are done by someone else and therefore their
labor cost is not relevant or the task itself is done for “free.” This is wrong.
First, let’s consider the packaging duties. They are being done by the person who bags the
drycleaning. Half of those labor hours MUST be charged to the shirt department.
Disagree? How can it possibly make sense to charge that labor to the drycleaning department?
It doesn’t matter that “that department can afford it.” You are only kidding yourself.
If the labor cost belongs to shirts, it belongs to shirts. Period. You could argue that if that
person didn’t bag shirts, she’d still have to be there all day, so therefore it’s being done for free.
That’s not such a foreign thought.
But that is when you would have to play manager and combine the drycleaning bagging duties
with another “part-time” job that takes all day, like perhaps inspection. Only you can answer
that because it will differ in virtually every plant.
In any case, packaging labor can not be ignored, even if for no other reason than to compare
yourself with your peers. If your total number of shirts is approximately equal to your number of
drycleaning pieces in any given time frame, then half of the bagger’s hours must be charged to
shirts.
All of these words are also true for washing labor (which may be done by your
drycleaner/spotter) although it may be only five to ten hours per week.
I look at mark-in labor from the other side of the fence, however. It is generally considered
acceptable to charge the cost to tag or mark-in to the customer service department. The best
justification for doing so is that, for the purpose of comparison with your peers, everybody does
it that way.
Arguably, shirt productivity is being measured and shirts have not begun their time in
“production” until they have arrived at the washing arena. If you wish to compare yourself to a
peer that has a central mark-in area, like perhaps a wholesaler, you should attempt to figure the
amount of time that your customer service staff actually uses to mark-in shirts. An accurate
figure will be tough to tabulate. But never consider mark-in to be free.
If you need to prove this to yourself, you will do so if you invest in one of those fancy tagging
machines that will require you to perform central mark-in. With that, you will not save labor. You
will create a new job instead.
When I had my last wholesale shirt laundry, I was at 28 pieces per operator hour, but that had
to include mark-in, as all of the business was wholesale.
I now have clients that have a PPLH of over 30 (my own personal drycleaner, for instance, is
at 31). In order for me to compare his performance to my own, I would need to recalculate my
historical figures and exclude the mark-in hours. He has a couple of stores where the counter
personnel do the mark-in chores.
Incidentally, suppose you have a full-timer plus a part-timer at a store (say, eight hours plus
four hours), and you are able to calculate that one-third of their time is used to mark-in shirts.
That is probably far too many hours, but it serves to illustrate this point.
Would that then mean that if they did not mark-in shirts, you could then eliminate the part-
time position? Very unlikely. Much more likely is that the part-timer is there to keep customers
from waiting during the busy time between 7 and 11 a.m.
In the final analysis, it is perfectly acceptable, in fact recommended, that mark-in hours not be
counted unless central mark-in is the rule. In that case, the mark-in hours would be backed only
for the purpose of comparison with others.
Don’t kid yourself
At our hypothetical plant, how can they be averaging 80 to 85 shirts per hour if they work for
37 hours? You argue that you pay them for breaks and restroom visits and maybe even lunches.
Nice try. That dog don’t hunt.
The fact is you are paying for 37 hours per employee. Like it or not, you are doing 67.5 shirts
per hour. Mortified? You should be. Defensive, perhaps? No surprise.
You explain that they actually do process 80 shirts per hour, it’s just that they have to help the
assembly people or do some folds after they’re done pressing.
That doesn’t fly. The fact is, we are not calculating how many shirts we can press per hour, we
are calculating a productivity figure.
Press a thousand shirts per hour if you wish, but they aren’t ready to return to the customer
until all of the necessary processes are complete. Or, press a thousand shirts per hour if you
wish, but if you need a hundred people to do it, you will be broke before you finish reading this
publication.
So whether you like it or not, our hypothetical plant isn’t even close to the 25 PPLH that he
may brag about. In actuality, he has two pressers that each work 37 hours (74), two post-press
people that likely work a little more than that (but we will be conservative and count them as 74
hours, too, for a sub-total of 148). Seven hours for washing labor (155) and let’s say 16 hours
for bagging. That is a total of 171 hours for 2,500 shirts.
The PPLH is simple to calculate: 2,500 divided by 171 labor hours = 14.6 PPLH. Ouch!
This hypothetical plant may or may not resemble your plant, but I think that you get the
picture.
What to do?
Can it be saved? Of course it can! But it requires that scary thing that we call management.
The pressers are probably not lazy; likely they simply have not been trained to effectively
produce 90 to 100 shirts per hour while maintaining top quality.
There is a good chance that the workflow rhythm in the plant is such that it generates relative
confusion in the inspection and assembly theater and the need for two people rather than one.
Even without added production from the shirt unit, shirts per hour remaining at a lowly 67.5,
PPLH would be increased to 18.6 with the reduction of one employee. As much as that is — a
savings of over 25 percent in labor dollars or roughly $13,500 per year — it is still a far cry from
what is possible.
In fact, it is easy to actually double those savings without increasing shirts per hour from the
shirt unit even one bit!
A reasonable goal, by the way, would be 29 PPLH for this scenario. And this is done everyday,
at efficient plants.
The hazard, and the point of this column, is that if you miscalculate your PPLH and think that
you are already at 27.5, you will do nothing about it because you will mathematically deduce
that you are as efficient as you can be, when in fact you are merely at 14.6 PPLH. You are
leaving a whopping $29,120 on the lunch table for your employees to take.
That is the cost of miscalculating pieces per operator hour.
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“If you do what you’ve always done, you’ll get what you always got.”
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Don Desrosiers has been in the drycleaning and shirt laundering