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How Much is Machine Downtime Really Costing You? Let’s Do the Math

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  • Machine downtime is the leading cause of lost production time. Unfortunately, according to the Business Industrial Network, more than 80% of business owners can’t accurately calculate their actual downtime costs1 — partially because there are two types of downtime:

    Planned Downtime

    Unplanned Downtime

    The Downside of Unplanned Downtime

    Unplanned downtime puts your partnerships and customer relationships at risk through:

    How to Prevent Unplanned Machine Downtime

    Some downtime is unavoidable — even the best manufacturing systems and parts eventually wear out or fail. But you can manage some of those costs and risks by scheduling planned downtime — routine maintenance and repairs that help prevent equipment failure. You can also build in resources to reduce the impact of unexpected equipment failures:

    Incorporate Predictive Maintenance Measures

    There is a vast range of affordable devices that can help predict machine failures, including2:

    Develop a Network of Qualified Repair Technicians

    Cultivate a network of trusted repair technicians to help optimize your uptime through:

    What You Don’t Know About Machine Downtime Can Hurt You

     How to Calculate Machine Downtime

    Let’s say one machine goes down for three full days.

    To find your total losses, complete the equation below using the following information:

    Machine Production Specifications

    Daily Operating HoursWeekly Operating HoursAverage # of Units Produced/WeekGross Profit/Unit
    8 hours40 hours10,000 units$6

    Calculate Hours of Downtime

    Hours of Downtime/ 40-Hour WeekDays of DowntimeHours
    8 hoursX 3 days24 hours of downtime

    Calculate Units Produced/Hour

    Average Units Produced WeeklyPlanned Hours of OperationUnits Produced/Hour
    10,000 units÷ 40 hours250 units

    Calculate Unproduced Units

    Units Produced/HourHours of DowntimeUnproduced Units
    250 units÷ 40 hours250 units

    Calculate Hours of Downtime

    Planned Operating Time Actual Operating TimeHours
    40 hours– 16 hours= 24 hours of downtime

    Calculate Average Production Rate/Hour

    Total Number of Units Produced WeeklyPlanned Operating TimeAverage Production Rate/ Hour
    10,000 units÷ 40 hours= 250 units/hour

    Calculate Unproduced Units

    Hours of DowntimeAverage Production Rate# of Unproduced Units
    24 hoursX 250 units6,000 units

    Calculate Total Gross Profit Lost

    # of Unproduced Units Gross Profit /UnitTotal Gross Profit Lost
    6,000 unitsX $6$36,000

    On top of gross profit lost, you’ll probably have to pay a professional to fix your downed unit. But remember —  the actual cost of downtime isn’t lost profit — it’s time wasted.


    SOURCES

    1 Business Industrial Network, What is the “True Downtime Cost” (TDC)?
    https://bin95.com/news/whats_true_downtime_cost.htm

    2 The Up! App, Predictive Maintenance vs. Preventative Maintenance for CNC Machines, Lathes, and Milling Machines
    https://www.theupapp.com/predictive-maintenance-vs-preventative-maintenance-for-machine-shops/

     3 Aberdeen Strategy & Research, The (Rising!) Cost of Downtime, April 21, 2016
    https://www.aberdeen.com/techpro-essentials/stat-of-the-week-the-rising-cost-of-downtime/

    4 Thomas, Downtime Costs Auto Industry $22k/Minute — Survey, March 29, 2006
    https://news.thomasnet.com/companystory/downtime-costs-auto-industry-22k-minute-survey-481017

    5 International Society of Automation, When True Cost of Downtime is Unknown Bad Decisions Ensue
    https://www.isa.org/standards-and-publications/isa-publications/intech-magazine/2006/January/channel-chat-when-true-cost-of-downtime-is-unknown-bad-decisions-ensue/

    6 Business Wire, Human Error is More Common Cause of Unplanned Downtime in Manufacturing Than Any Other Sector, According to New Research, November 7, 2017
    https://www.businesswire.com/news/home/20171106006370/en/Human-Error-Common-Unplanned-Downtime-Manufacturing-Sector

    7 ServiceMax, The Costs, Causes & Consequences of Unplanned Downtime
    https://lp.servicemax.com/Vanson-Bourne-Whitepaper-Unplanned-Downtime-LP.html


    Posted on: January 17th, 2023 by: Precision Drive Systems

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