Where supply chain management and data science meet, interesting questions arise. In our Data2Move Research Stories, you will find out how students have answered these. This time, we delve into the work of Thijmen Bruist to learn more about the operational challenges for on-demand laundry, with Data2Move partner TKT.
Where it started
On-demand laundry for consumers is a growing business. Think for example of the elderly who are no longer able to do their own laundry, the always-busy households, or the young professionals who simply wish to use their time for things more fun than laundry. Yet there are still only a handful of companies that offer such on-demand laundry services.
It is important for laundry companies to be ready for the continued growth of on-demand laundry. However, the processes for on-demand laundry are very different from standard laundry processes, since a much larger variety of textiles needs to be cleaned. Many laundry companies that wish to serve this growing market lack the knowledge (and resources) to change their production process overnight.
Therefore, Thijmen Bruist used a bottom-up approach to analyze the individual production steps of two laundry companies to gain more insight into operations involved in on-demand laundry and the innovations that the new process requires. By thorough analyses of the throughput times and costs, we gain insight in the effectiveness and feasibility of each process innovation.
The importance of data
In order to analyze throughput times and costs, Thijmen used data from two case studies. The first case study predicts the expected change in costs under increased demand. The second case study provided data on the time spent in each production step. From this data, Thijmen calculated the throughput time and the time to expedition for each item, from which the profit-maximizing volume is calculated.
Findings and advice
Based on the data analysis of costs and throughput times, Thijmen proposed a transition model: “The most effective way forward is to gradually invest in automation. This should, in turn, allow for more production and more profit”. The transition model consists of the following steps:
- Gain insight into the cost structure of the internal logistics.
- Process a volume close to the profit maximization point, thereby using the current production facilities as efficiently as possible.
- Invest in process automation when the company already processes a volume between their profit maximization point and their revenue maximization point. Investing in process automation will allow for higher production volumes which are essential for higher profits.
- The company should use a Return-On-Investment model to determine which production step they should automate.
- Steps 1 to 4 are repeated.
Thus, the model guides laundry facilities in upgrading their laundry processes to profitable on-demand laundry and provides them with implementation steps accordingly.