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The actual cost of downtime in the manufacturing industry

For most manufacturers, downtime is the single largest source of lost production time. As you probably already know, downtime is any period of time when a machine is not in production (quite literally, down). Downtime can be categorized to help identify patterns in machine performance. It receives a high level of attention since equipment failures and breakdowns are highly visible. However, as visible as downtime often is, most companies significantly underestimate their true downtime, and over 80% of companies are unable to calculate their true downtime costs correctly (“What is the True Downtime Cost (TDC)?” 2017).

To that end, not all downtime is created equal; in reality, the greatest expense is caused by unplanned downtime. Unplanned downtime is downtime that occurs unexpectedly or as a result of a failure (for example, a hardware failure or waiting for appropriate materials to complete a task). Common categories of unplanned downtime include excessive tool changeover, excessive job changeover, lack of operator, and unplanned machine maintenance.

When unplanned downtime occurs, no value is being produced but the cost of overhead operations continues to grow, which directly impacts a company’s bottom line. According to Analyst firm Aberdeen Research, 82% of companies have experienced unplanned downtime over the past three years and that unplanned downtime can cost a company as much as $260,000 an hour!

A new study sponsored by ServiceMax (conducted by Vanson Bourne of GE Digital), “After The Fall: Cost, Causes and Consequences of Unplanned Downtime,” surveyed 450 field service and IT decision makers across the Globe and in many industries including, manufacturing, medical, oil and gas, energy and utilities, and transportation. The study found that productivity, IT, and customer service are still hit hardest by unplanned downtime and that the reverberation is felt across businesses as a whole.

The same study also found that unplanned downtime is also driving renewed investment in digital transformation:

  • Of the 82 percent of companies that have experienced unplanned downtime over the past three years, those outages lasted an average of four hours and cost an average of $2 million.
  • Unplanned downtime results in loss of customer trust and productivity — 46 percent couldn’t deliver services to customers, 37 percent lost production time on a critical asset, and 29 percent were totally unable to service or support specific equipment or assets.
  • Only 12 percent of respondents from organizations in the US consider their organization to be exactly where they need to be and ahead of their competitors in terms of their digital industrial journey — compared to 16 percent in both the UK and France and 23 percent in Germany.

To read more : IIoT World

Photo Credit : Lorenzo Cafaro from Pexels

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