Business Case

1. Cost Avoidance in Laundry Operations through an integrated Supply-Chain approach between New Wave Laundry Co. The Westin Turnberry Resort and Sheraton Grand Hotel & Spa, Edinburgh

2. Business Case In Sept 05, the laundry company that supplies Sheraton Grand in Edinburgh and the Westin Turnberry Resort reported that, owing to increases in wholesale energy costs and the subsequent pressures within their own business, they were having to consider a price increase of approx 7% for ‘06 (more than 2 x inflation). Problem Statement For Turnberry, this price-rise would result in an immediate increase of $30,600 per year in laundry costs (assuming occp’d rooms stay the same as ‘05) Scope All processes internal to New Wave Laundry Co. All relevant processes internal to Westin Turnberry Resort All processes linking the two Goal Westin Turnberry Resort to use their Six Sigma experience and knowledge to work with New Wave Laundry Co. in order to find New Wave Laundry Co. savings equal to (or more than) $30,600, thereby avoiding the proposed price increase to WTR while still maintaining the increased cash-flow required by NWL

3. The Geography Kirkcaldy, Fife Maidens, Ayrshire 44km from New Wave Laundry depot 185km from New Wave Laundry depot

4. The Problem

5. High Level Process Previous work done in linen has already reduced linen usage Further significant reduction in linen usage is unlikely and is not going to avoid cost increase State-of-the-art automated and computerised 13-step cleaning process Ultraviolet optical defect detectors & rejection system So, where are the opportunities?

6. The Low-Hanging Fruit How does our ordering process affect their ability to manage their logistical operation? Logistics Processes of Delivering & Uplifting Linen with a 185km Journey each-way from Hotel to Laundry Company Do we really need a delivery every day? Why do we keep getting our orders wrong so they end-up sending additional emergency deliveries? How do our usage patterns, occupancy and internal processes affect their ability to operate their plant effectively and efficiently?

7. Root Causes – ‘Emergency Deliveries’ – Turnberry Spa “We give them one towel each but they always ask for another one. Some people use 4 or 5” Spa Receptionist Spa calculate linen requirements from treatment bookings “There’s no way of knowing how many members or hotel guests will come down for a swim so we just have to guess” Spa Fitness Manager Spa place order with Linen Room “…on days when we don’t receive an order from the spa (which is most), we just order 300” Assistant Exec Housekeeper Linen Room collates spa order with rooms and forwards to laundry “We used to send them what they asked for but, within half an hour, they would be on the phone asking for an extra 400 towels. So, these days, we just send them whatever we’ve got!” Graham Calder, MD of New Wave Laundries • Spa Solutions:- • Replace unreliable, unpredictable and inconsistent ‘Daily Order’ system with self-regulating ‘Delayed Exchange’ so always maximum volume of towels on site • Re-align stock levels to cope with peak periods

8. Root Causes – ‘Emergency Deliveries’ – Turnberry Rooms Existing process attempted to calculate exact amount of each linen item required for following day by entering number of guests in each room into a spreadsheet. Data was not entered ‘per room’. Shortcuts were being used to approximate – For example, room 110 and 112 each had 10 people in them! …and the spreadsheet had some great formulas… [ No. of Hand Towels Required = No. of Pillow Slips x 1.5 ]

9. Root Causes – ‘Emergency Deliveries’ – Turnberry Rooms The Turnberry site consists of 3 main buildings (the hotel, spa and golf clubhouse) and a further 16 ‘lodges’ and ‘cottages’, each with their own stock of linen. In total there are 36 linen cupboards around the Turnberry site, all holding varying levels of stock of various items. The root cause in placing an accurate daily order came from not knowing what was already on-site. This often led to ‘panic’ ordering for extra items that, actually, were already available – they were just in a cupboard a long way away! Solutions:- Centralised Storage Facility Automated Ordering Process using Vision XL

10. Goal 3:- To streamline the ordering process to improve accuracy - SOLUTION Daily Order system relied on Turnberry faxing their order to New Wave by 9am each morning. The time-stamps on the faxed orders showed that Turnberry managed to achieve this only 5 times in 6 months. Every other time, the order was received after 9am VisionXL report was set-up to automatically generate a forecasted occupancy report with arrivals & departures each day, looking 14 days ahead Vision ‘Alert’ module configured to generate this report at 5am every morning and automatically e-mail itself to orders@newwavelaundries.co.uk New Wave then run their own spreadsheets and calculations based on our rooms inventory to calculate what linen we need for each day – and can also forecast exceptional peaks into the future

11. Root Causes – ‘Standard Deliveries’ – Turnberry Owing to Turnberry being New Wave’s single biggest contract, commanding up to 25 cages of linen a day, they own and operate a 15 tonne truck especially for the Turnberry contract. The also have a fleet of 7.5 tonne trucks for their other contracts How often was this 15 tonne truck actually needed?

12. Root Causes – ‘Standard Deliveries’ – Turnberry & Edinburgh Solutions:- Wednesday’s requirements were added to the small Tuesday delivery and the Wednesday delivery was eliminated Smaller truck used for all except Tuesday & Sunday deliveries …enabling larger truck to be used for Edinburgh - amalgamate early morning spa delivery with evening rooms delivery, eliminating 7 Edinburgh journeys per week

13. Goal 4:- To make any obvious efficiencies to New Wave’s internal processes Back to the spa …blissfully unaware how minor steps at our processes affect New Wave Last step in the spa linen process, every night was count the number of each linen item for billing purposes Billing is calculated purely on clean items sent from the laundry so all spa counting is regarded as completely NVA and stopped…..except… While the spa associates diligently counted their linen, they separated different items into separate piles (…before filling in the count sheet and bundling everything together back into the cage, ready to be uplifted) First step in the process at New Wave’s depot is to segregate and separate items into piles as only same-items can be washed together Therefore:- If we kept the segregation & separation process (which we have always done anyway) but KEEP the items separated into bags, it removes an entire process step for New Wave and removes NVA from the supply-chain as-a-whole

14. Goal 4:- To make any obvious efficiencies to New Wave’s internal processes Back to the spa …blissfully unaware how minor steps at our processes affect New Wave Lack of storage space for linen cages in spa building meant that, on a busy weekend, cages of used linen would get left outside (…and as you know, it quite often rains in Scotland) A cage of soiled linen typically weighs 35kg. A cage of soiled linen that has been left out in the rain typically weighs up to 120kg New Waves automated and computerised washing programme cycles are all done by weight (35kg per cycle)…so one cage that should take 1 cycle, now takes 4 cycles with 4 x the energy, 4 x the chemicals, 4 x the labour etc. The solution:- Empty out some disused cupboards and create some extra storage!

15. Goal 4:- To make any obvious efficiencies to New Wave’s internal processes • Longer Term Proposals • Exploring the possibility of drilling own water source bore-hole • local geology means this is possible – ROI currently being carried out BGS • Specialist Energy Consultants brought in through contacts at Sheraton Edinburgh • alerted to the availability of various government grants and initiatives to financially help with energy conservation and efficiency • Changing energy source from natural gas to ‘Heavy Oil’ (planning permission pending for the necessary building alterations and tanks)

16. What made it possible? A mutual challenge that effected both parties A mutual need and desire to confront the challenge with respect and understanding of each other’s businesses Open, honest communication and a large helping of trust built-up over weeks of conversation and ‘give and take’ An open-minded, willing counterpart with a process-driven, value-stream, supply-chain mindset

17. The Moral of the Story:- Everything we do has a knock-on effect somewhere – make sure you are aware what those effects are before you take action There is no point working in isolation – our hotels are merely a link in a long chain that brings value to a paying guest. Just because something does not add value to us, doesn’t mean it doesn’t add value to the chain as-a-whole Our suppliers may not deliver the quality, consistency and accuracy that we would like all the time….but before we kick their arses – let’s take a good, long look at our own processes! If it’s a pain for us…the chances are, it’s a pain for them also – so let’s solve it together!