Costs of Downtime in the Manufacturing Industry

COSTS OF DOWNTIME IN THE MANUFACTURING INDUSTRY DOWNTIME COSTS CAN BE DIVIDED INTO 2 MAJOR CLASSES: Tangible and Intangible. Tangible costs are those which are relatively easy to quantify. Intangible costs are difficult to put a dollar figure on but may be even more significant than tangible costs. Tangible Costs: Lost Capacity, Lost Production, Direct Labor, Inventory Product Loss Intangible Costs: Responsiveness, Stress, Innovation TRUE DOWNTIME COST Includes a vast array of wasted business support costs and lost business opportunity costs because resources were needed to rectify a downtime incident that probably did not need to happen. Average total annual downtime for industry (Hours) 1Average monthly downtime for industry 800 600 400 200 Downtime in the Automotive Industry- In 2006, auto industry manufacturing executives showed stopped production costs avg. $22,000 per minute. $1.3 Million per hour of downtime Injection molding/Extrusion Machinery and equipment Other Paper Automotive The Fix- 53% of executives all agreed - reduction of downtime through predictive and preventative maintenance. Metal products Food, beverage tobacco FACTORS AFFECTED BY DOWNTIME BOTTLENECK START-UP SALES EXPECTATION PEOPLE COST CATEGORIES QUALITY MAINTENANCE CONTROL PRODUCT ENGINEERING LLP/LPM MANAGEMENT EQUIPMENT LABOR OVERHEAD TRUE DOWNTIME COST PRODUCTION DOWNTIME TIME LOSS REDUCED RATE PART/ SHIPPING SCRAP TOOLING BAND-AID OEM INDUSTRIAL FACILITIES THAT ESTIMATE TDC 20% Almost every factory loses at least 5% of its productive capacity from downtime, and many lose up to 20%. Of the 20% that can estimate their downtime usually underestimate TDC by 80% 200% - 300% A TYPICAL MANUFACTURER CASE STUDY · Backlog of work orders 4 months over due • Only focused on emergency repairs • 20% Equipment downtime • Labor hours & parts uncategorized and difficult to track PROBLEM: FIX: Improve the Preventative Maintenance Program • Automated key metrics from engineering, production, inventory control, and maintenance to a central dashboard. • Dashboard gave management up-to-the minute view of o Downtime by production line o Work order aging o Work order throughput o Open work orders by type 29 RESULTS AFTER IMPLEMENTING CMMS 100% BACKLOGGED WORK ORDERS COMPLETE 80% Within 60 Days Within 30 Days 60% 27% 40% 73% 20% 0% BEFORE AFTER Uptime Downtime SOURCES: PRESENTED BY: http://www.anexio.com/blog/the-true-cost-of-downtime-in-the- manufacturing-industry/ http://packagingindustry.fraingroup.com/2011/10/20/calculating-downtimes- costs/ emaint http://www.isa.org/Content/ContentGroups/InTech2/Departments/Channel Talk/20069/When_True_Cost of Downtime_Is_Unknown, Bad Decisions_ Ensue.htm http://news.thomasnet.com/companystory/Downtime-Costs-Auto- Industry-22k-Minute-Survey-481017 ш