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 costs1Business Industrial Network, What is the “True Downtime Cost” (TDC)?
https://bin95.com/news/whats_true_downtime_cost.htm — partially because there are two types of downtime:
Planned Downtime
- Routine maintenance or repairs that allow you to plan for and recover lost income
- Requires shorter recovery time with lower costs than unplanned downtime
Unplanned Downtime
- Unexpected equipment failures that keep your business from producing value
- Raises overhead and negatively impacts your bottom line
The Downside of Unplanned Downtime
Unplanned downtime puts your partnerships and customer relationships at risk through:
- Production delays
- Delayed deliveries
- Lost income
- Increased stress throughout the production and supply chain
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, including2The Up! App, Predictive Maintenance vs. Preventative Maintenance for CNC Machines, Lathes, and Milling Machines; November 22, 2022
https://www.theupapp.com/predictive-maintenance-vs-preventative-maintenance-for-machine-shops/:
- Infrared thermal imaging
- Vibration analysis
- Oil analysis
- Integrated sensors
- Monitoring modules
Develop a Network of Qualified Repair Technicians
Cultivate a network of trusted repair technicians to help optimize your uptime through:
- Eliminating lengthy searches for qualified service resources
- Efficient service request submissions
- Quick and responsive quotes
- Greater employee and operational productivity
What You Don’t Know About Machine Downtime Can Hurt You
- According to a 2016 study, the average cost of downtime across all businesses was $260,000 per hour — up 60% over 20143Aberdeen 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 - Downtime varies significantly by industry — in the auto industry, downtime costs up to $50,000 per minute and $3 million per hour4Thomas, Downtime Costs Auto Industry $22k/Minute — Survey, March 29, 2006
https://news.thomasnet.com/companystory/downtime-costs-auto-industry-22k-minute-survey-481017 - Factories lose an estimated 5%– 20% of productivity to downtime5International 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/ - Equipment failure is a leading cause of machine downtime.
- Human error accounts for approximately 23% of unplanned downtime6Business 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 - A 2017 survey revealed that 70% of companies don’t know when their equipment is due for maintenance or upgrades7ServiceMax, The Costs, Causes & Consequences of Unplanned Downtime,
https://lp.servicemax.com/WP-BE-Unplanned-Downtime-LP.html
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:
- Hours of downtime
- Average number of units produced per week
- The machine’s operating hours
- Gross profit per unit
Machine Production Specifications
Daily Operating Hours | Weekly Operating Hours | Average # of Units Produced/Week | Gross Profit/Unit |
---|---|---|---|
8 hours | 40 hours | 10,000 units | $6 |
Calculate Hours of Downtime
Hours of Downtime/ 40-Hour Week | Days of Downtime | Hours |
---|---|---|
8 hours | X 3 days | 24 hours of downtime |
Calculate Units Produced/Hour
Average Units Produced Weekly | Planned Hours of Operation | Units Produced/Hour |
---|---|---|
10,000 units | ÷ 40 hours | 250 units |
Calculate Unproduced Units
Units Produced/Hour | Hours of Downtime | Unproduced Units |
---|---|---|
250 units | ÷ 40 hours | 250 units |
Calculate Hours of Downtime
Planned Operating Time | Actual Operating Time | Hours |
---|---|---|
40 hours | – 16 hours | = 24 hours of downtime |
Calculate Average Production Rate/Hour
Total Number of Units Produced Weekly | Planned Operating Time | Average Production Rate/ Hour |
---|---|---|
10,000 units | ÷ 40 hours | = 250 units/hour |
Calculate Unproduced Units
Hours of Downtime | Average Production Rate | # of Unproduced Units |
---|---|---|
24 hours | X 250 units | 6,000 units |
Calculate Total Gross Profit Lost
# of Unproduced Units | Gross Profit /Unit | Total Gross Profit Lost |
---|---|---|
6,000 units | X $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