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Danish Textile and Laundry Company Berendsen (Part of Elis Group) Uses Digital Products to Disrupt Industry

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Danish Textile and Laundry Company Berendsen (Part of Elis Group) Uses Digital Products to Disrupt Industry MARKET NOTE Danish Textile and Laundry Company Berendsen (Part of Elis Group) Uses Digital Products to Disrupt Industry Mette Ahorlu EXECUTIVE SNAPSHOT FIGURE 1 Executive Snapshot: Danish Textile and Laundry Company Berendsen (Part of Elis Group) Uses Digital Products to Disrupt Industry Source: IDC, 2018 August 2018, IDC #EMEA44161018 IN THIS MARKET NOTE This IDC Market Note discusses the use of digital technologies by Berendsen, part of Elis, to develop innovative offerings that provide additional value to clients and drive efficiency, growth, and customer satisfaction. Berendsen (part of Elis) is a leading innovator in Denmark, and Klaus Nissen, its CIO, was nominated CIO of the Year by IDC and IDG in Denmark in 2016. Since 2017, Berendsen has become part of Elis, a multiservice leader in rental servicing operating in 28 countries. IDC'S POINT OF VIEW Berendsen was originally a Denmark-based laundry/textile services company providing rental, wash, and delivery of workwear, linen, and other textiles. In 2017, Berendsen was acquired by Elis, the world's second largest multiservice leader in the rental and maintenance of linens, work clothes, and hygiene and wellness equipment. Some of its largest customers are from the healthcare and hospitality industries; it also supplies cleanroom and lavatory environments in the public and private sectors. The value proposition centers around hygiene and cost efficiency, providing SLA–based services that are noncore to the client's business. Environmental focus is a new addition to the value proposition: services are more environmentally-friendly than competitors or insourced alternatives. The industry is highly competitive with price and delivery quality as key parameters. Challenges Price pressure leads to the constant need to improve operational efficiency. One of the key challenges hampering the industry is that stock is dwindling. Fewer pieces of textiles are returned for wash than what has been delivered. Efficient management of the delivery-to-return cycle is therefore potentially a key way to reduce this loss. It could also reduce points of disagreement with clients, as it has until recently been difficult to trace individual laundry items cost-efficiently. A side effect of laundry items disappearing has also been that laundry services suppliers are challenged to have relevant items available to clients without costly overstocking. This has occasionally been a cause of customer dissatisfaction. Solution: Textile Management Innovation Since the mid-1990s, the firm has gradually increased its use of technology in textile management, first through bar codes, then low-frequency (LF) radio frequency identification (RFID) chips, and now ultrahigh frequency (UHF) chips. The latter can be embedded into each piece of textile to enable tracking at different stages: the process of delivery to the return of each piece individually, as well as all each production step within plants. Using analytics, it is also possible to determine clients' weekly and daily needs much more accurately and therefore offer a better service. The real breakthrough in technology-enabled innovation came in 2015 with a Danish initiative when the group started to involve clients in the process of developing new services. Examples of innovation in the management of hospital uniforms include: . A solution in which each hospital employee (doctors, nurses, porters, etc.) registers his/her preferred combination of clothing, and each day goes into a "store" to pick the relevant items, scan them by putting them on a specific shelf with a scanner, and then return them after use to a laundry basket fitted with a scanner. ©2018 IDC #EMEA44161018 2 This helps precisely track the usage of textiles and manage stock in the hospital. This has had multiple effects on customer satisfaction: . Better hygienic behavior around employees' clothing as items are tracked via sensors by unique user and the amount of time since each piece of clothing has been washed . A more accurate delivery of the right items in the right sizes so that users always have what they require . More accurate and granular tracking has enabled more precise order lists and shipping of clean clothes, leading to a "dramatic reduction of redundant items with substantial cost reductions," as Nissen put it . Another advanced innovation (taking the above solution a step further) is a wardrobe system that automatically gives each person the clothing he/she needs. Users don't need to personally browse a wardrobe to find what they need — rather, they present an ID card and the relevant clothing is automatically dispensed on a hanger. This fully automated solution means that no human touches the clothing from its arrival at the laundry "shop" when it is dirty until it is taken out clean from a dispensing cupboard at a different location. This increases cleanliness, which is important in laboratory environments. This solution is available for hospitals/healthcare, high-hygiene industries, and the food industry in multiple countries with Elis presence. Mops for the cleaning industry used to see high disappearance rates. Equipping mops with chips has reduced loss rates — and therefore, costs — dramatically and has enabled clients to check the quality of cleaning by automatically counting the relevant number of clean mops that have been used on an area. This solution also offers the option to use sensors in the room to check that specific areas have been cleaned with a specific chipped mop. Another promising innovation is in lavatory environment services, where intelligent light in soap, towel, and disinfectant dispensers drives up levels of handwashing, subtly reminding ("nudging") people to wash their hands. A study performed in Denmark shows it has been possible reduce sickness days among clients using this solution. In a recent trial for the client, Kemp & Lauritzen had a high-tech LightGuide system installed that, through motion sensors and light, guides employees to follow the optimal hand washing procedure after visiting the toilet. After 10 months, MedHelp concluded that the number of sick days had fallen by 8% in the test location with LightGuide compared with the benchmark location. It is extremely positive that technological nudging alone can create that effect. Outcomes As the innovations show, this relatively low-skill industry has been ripe for technical disruption. The use of IoT sensors in combination with analytics and automation has created more value for the customer and cost efficiencies, and also driven revenue growth in Denmark. The company says that increased competitiveness, better prices, and higher customer satisfaction has enabled it to win new business. The hospital clothing solution is used in all hospitals in the Copenhagen region in Denmark and in several other regions as well: it is also popular in Sweden, Norway, and the Netherlands, and is starting to be used in the U.K. This mop solution has been so successful that a new business line for mop management has been launched and a specialized mop laundry in Denmark is being built. Inside the firm, work processes have changed as a result — fewer people are doing lower-skilled work while more people now have advanced skills relating to supervising, managing, and repairing technology. This change in the workforce has primarily taken place through retraining. No redundancies have been necessary, as growth has compensated for work made unnecessary by automation. ©2018 IDC #EMEA44161018 3 This is probably a major factor in increasing worker satisfaction as well: repetitive lower-skilled tasks have been replaced by more varied and interesting tasks. Innovation has become the topic of lunch conversations in a positive sense. Innovation Organization and Process Innovation is driven by a cross-functional team, sharing across countries as well as at the Elis Group level, combining business and technical skills. Involving customers to deeply understand their needs creates a fruitful combination that ensures greater levels of creativity and buy-in. This approach also ensures more efficient prioritization and coordination. Since the acquisition by Elis in summer 2017, Berendsen teams have been part of the group innovation process. An innovation board at the group level is working closely with local teams to ensure consistency, information sharing, support, and deep understanding of local business. This organization ensures successful innovation and that multiple proofs of concept are spread quickly across the group. Solution Development and External Vendor Collaboration While initially designed internally, development, implementation, and iteration processes are done in collaboration with start-ups and external providers. This mixed organization (internal/external) brings more up-to-date technologies. Solutions often involve specialized hardware — the chips, for instance, need to tolerate washing with chemicals at high temperatures — as well as software development. Internal teams keep project management and road maps part. Elis Group retains project management, but technical solution development and the full-scale implementation is handled by IT services companies. Working with start-ups to experiment on new technologies helps bring agility in the innovation process. Start-ups are more willing to engage in experimentation to learn. Future Outlook Elis Group's experiences with technology-enabled innovation are very positive; innovation levels are expected to steadily increase. More automated services built
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