Downtime poses a potential threat to any business – but for manufacturing plants, that threat is even more significant. Manufacturers are always looking for a way to minimize the potential for downtime, because time is money – and downtime can be incredibly costly. The best way to do this is by trying to calculate the true cost of that downtime and plan ahead for any financial stress. While downtime does create issues for the manufacturer, there are times where it is planned for maintenance. But having the ability to plan ahead removes some of that financial burden – as unplanned downtimes can sometimes cost 10x more than a planned outage. This is why minimizing that potential for an unplanned outage is crucial.

Many manufacturers will take the direct cost of labor and materials into consideration when estimating costs, but some will overlook the other important factors like lost revenue due to a halt in production, wasted labor, excess inventory, a potentially tarnished reputation of reliability or stress on the employees/equipment. All of these factors can be broken down into direct costs and indirect costs.

The most obvious direct cost is the loss of production. When downtime is occurring, machines are down and production is completely halted – and as we mentioned, time is money! The longer the machines are down, the longer product is not being manufactured. Lets say a line produces an average of 500 items in an hour, and each item brings in $5.00 worth of profit. That would make cost $2,500 in profit just in one hour of downtime. If it took 4 hours to complete the repair, that could add up to a total loss of $10,000 – all while the manufacturer is still responsible for any associated labor costs!

While indirect costs are less obvious and more difficult to plan for, they are just as relevant. Major downtime can reduce employee productivity due to stress, while creating stress on the equipment as well. If a customer is impacted by the outage, you also run the risk of losing future sales from that customer. They lose their trust in you as their manufacturer, affecting the business relationship that you may have had. This may be more of a long-term impact, and quite difficult to tangibly calculate in the moment – but it should not be ignored, as the loss of customers is incredibly significant to a business.

How do we manage downtime in the future? Many manufacturers have become more focused on creating predictive maintenance programs to minimize that potential for unplanned downtimes. This would require the use of Smart Manufacturing technology in order to gather the data needed to predict and assess the analytics based of your facility specifically. For more information on how to predict downtime in your facility with Leviton and Werner Electric Supply, contact Ben LeRoy.