Trends | May 03, 2023

Understanding the True Cost of Downtime in Manufacturing

When it comes to running a successful manufacturing operation, minimizing unplanned downtime is one of the most critical tasks that business owners face. In fact, the cost of downtime in the manufacturing industry is estimated at a whopping $260,000 per hour, with manufacturers experiencing approximately 8000 hours of unscheduled downtime annually due to maintenance and incidents. Shutdowns can consume upwards of 10% of production time, with nonproductive hours creating a host of undesirable, costly conundrums for business owners, including wasted materials, overtime, hiring outside help, and significant loss of revenue. Understanding the actual cost of downtime is crucial to eliminate as much of it as possible from your business.

What Is Downtime in Manufacturing?

Downtime in the manufacturing industry refers to periods when production or machines are halted. There are two types of downtime: planned and unplanned. The former refers to periods of stopped production that have been scheduled and accounted for, times when machines are serviced, and changeover processes are carried out. Scheduled routine maintenance is critical to maintaining a manufacturing facility since regular machinery maintenance minimizes production-halting malfunctions.

Conversely, unplanned downtime occurs when machines intended to be operational are stopped because of equipment failure, lack of materials, worksite accidents, or other contingencies. Most commonly, in these situations, machinery suddenly needs unplanned maintenance or repair due to a malfunction, such as a belt or pump failing. This halts production, requires specialized attention, troubleshooting, and repair, and results in a loss of revenue.

The True Cost of Downtime

Calculating the actual cost of downtime (TDC) is a crucial part of understanding the health of your business. It is estimated that nearly 80% of manufacturing facilities fail to assess their TDC properly. To determine the actual cost of downtime, many factors must be taken into consideration, including the amount of time that machines are halted; costs associated with temporary and permanent mechanical fixes; fees related to contractors, OEM, or consulting; scrap material; shipping; and replacement parts, among others.

How To Minimize Downtime

As a business owner, it’s imperative to get a handle on downtime to avoid significant business complications and loss of revenue. So, how can businesses make a dent in their unplanned downtime? Experts recommend starting by accurately tracking downtime, collecting the appropriate data to understand why it is occurring, how long it lasts, who is involved with and affected by it, and any other factors that will impact proposed resolutions.

Leverage the Latest Tracking Technology

Downtime tracking software is a great way to collect and analyze this data to decide how to proceed. These days, there are a wide variety of platforms to choose from when it comes from tracking and analyzing production downtime. By taking advantage of software that offers functionality such as automated downtime tracking and remote, real-time reporting, businesses can increase efficiency on the way to meeting their production goals.

Implement a Data-Driven Improvement Framework

From here, businesses should rigorously monitor production and manufacturing KPIs, conduct routine preventative maintenance on machines, and institute a data driven improvement cycle such as the DMAIC model (Define, Measure, Analyze, Improve, and Control). Methodologies such as DMAIC offer businesses comprehensive, battle-tested means by which to understand negative performance fluctuations and their root causes and figure out data-backed ways to remedy them.

How Can We Help?

Here at Crescent, we’re aware of the challenges posed by unplanned downtime and the importance of minimizing it. If you’re looking for a partner in reducing downtime, we can help. In addition to offering a wide selection of best-in-class manufacturing products from top suppliers, we can work with you to build solutions for your business. Our industry experts are available to help you figure out ways to improve your maintenance protocols and streamline processes to help reduce the amount of unplanned downtime your business experiences.