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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: manufacturing-industry/ costs/ emaint Talk/20069/When_True_Cost of Downtime_Is_Unknown, Bad Decisions_ Ensue.htm Industry-22k-Minute-Survey-481017 ш

Costs of Downtime in the Manufacturing Industry

shared by jessief on Jul 02
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In any industry and business there are times when something goes wrong and all work stops. This is called “Downtime” and it can be extremely expensive. Downtime Costs can be divided into 2 major c...




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