“More and more manufacturers are adopting the technologies birthed from i4.O and are gradually learning that we have evolved past the old way of maintaining machines. While the previous practices have been to schedule maintenance on a calendar basis, we now know, through data and analytics, that there is a better way of doing things. We are now tracking the pulse of the machines to prevent costly downtime before the damage happens” – Manny Bonilla, VP Product Strategy at Shoplogix
By now you’ve seen the jaw-dropping stats around machine downtime costs to manufacturing businesses circulating in industry publications. One brow-raising stat comes from the Analyst firm Aberdeen Research which reveals that 82% of companies have experienced unplanned downtime in three years costing a company as much as a shocking $260,000 an hour. And if you’re in the auto manufacturing industry, machine downtime costs around $22,000 per minute. That’s right…per minute!
Regardless of the industry, whether it is automotive, food and beverage, CPG, no manufacturer is safe from unplanned machine breakdowns..that’s just the reality when you’re dealing with equipment that performs repetitive tasks. However, the worrisome news is that 80% of manufacturers still don’t have a true picture of the costs associated with machine downtime making the issue a low priority to be addressed. This is dangerous and can have a dramatic impact on yearly revenue loss.
Calculating Machine Downtime Costs
Think about the last unplanned machine downtime you had. How long did it last and what caused the breakdown? With every minute that passes during a machine downtime, there is a domino effect on several areas outside of just the impacted machines that add to the overall production stoppage costs that need to be considered. Below are a few of these factors to include when calculating the true cost of machine downtime.
- Direct Labor Costs – To calculate this cost, take the full length of machine downtime and multiply it by the hourly rate of the machine operators. Are there other workers outside of the impacted machine operators that were unable to work during the standstill?
- Indirect Labor Costs – Examples of indirect labour include workers such as managers, accountants and maintenance staff. Were there any supervisors and managers that had to dedicate time to resolve the issue? If so, how many hours were spent and what projects were delayed due to this? Take the average employee salary divided by the number of hours worked and multiply that by the number of indirect labor employees.
- Affected Revenue – Estimate how much revenue your company generates in a given hour and how many products or items are created within that time to calculate the loss of product.
- Start-Up Costs – Determine the start-up costs related to restarting the machine. How many additional workers were needed? Were there any inspection costs?
- Wastage Costs – This is a big one, especially in the food and beverage manufacturing industry. Were there any raw materials that were deemed unusable given the time of the machine failure such as any perishable items? What about any scrap caused by the failure?
- Machine Repair – Determine the costs related to repair of the machine, either temporarily or permanently.
When you add all these costs together, you may be surprised by the dollar amount lost during the downtime. More and more manufacturers are opting for advanced technology to reduce the number of times machines fail. This is where preventative maintenance software comes in.
Preventative Maintenance Smart Factory Solution
Sniffles, headaches, sore throats…when we feel these symptoms we know that a looming cold is on the horizon and will have our lives at a standstill. When we detect these symptoms, we typically go to our doctor who analyzes the symptoms to prescribe a specific, targeted remedy. So just like our bodies, machines also need to be analyzed when “symptoms” occur and the correct remedies need to be applied as soon as possible to avoid breakdowns. The operational data that is shared through software and analytics to prevent standstills and employ corrective action is the purpose of preventative maintenance software.
Preventative maintenance software anticipates maintenance requirements in machines on the factory floor. By connecting to every single asset in your production line, preventative maintenance software allows workers to analyze the operational data from each machine to identify any patterns that emerge to predict when maintenance will be required on any given equipment.
“It takes an evidence-based rather than calendar-based maintenance schedules to ultimately reduce waste, save on costs and labor” – Manny Bonilla. Whereas in the past, manufacturers would rely on reactive maintenance, many companies are starting to take this proactive approach to maintenance for improved uptime and production which remains them to stay competitive.
For example, Shoplogix preventative maintenance software has the ability to run reports to determine how much usage a machine or tool has. It can track a determined threshold…such as every 1000 reps or 50,000 parts and monitor the pulse of the machine when it reaches those thresholds to determine if maintenance work needs to be done.
Other Benefits of Preventative Maintenance Software:
- Real-time dashboard views and data to predict failures, weak points in production facilities and monitor pulse of machines.
- Ability to diagnose and solve problems in real-time.
- Monitor additional machine process data and set up alerts for out of spec thresholds such as temperature, pressure, and vibration, to plan upgrades and maintenance.
- These alerts can be set up to show up on the dashboard, operator screen, SMS text, or emails.
- Reduce unnecessary waste and scrap caused by poorly operating and maintained machinery.
- Ensure on-time delivery by reducing the chance of emergency repairs to machines which often takes a few days to fully fix delaying order completion/deliveries leading to unsatisfied customers.
- Decrease costly downtime and allow machines to work at full efficiency for profitable uptime.
- Optimize equipment lifetime to improve conservation of assets and increase life expectancy of valuable assets. This will avoid the costs associated with the premature replacement of machinery and equipment.
- Increase employee productivity and reduce overtime costs. Working on a scheduled basis instead of a crash basis to repair breakdowns facilitates an economical use of maintenance workers.
- Improve safety and quality conditions for workers
There are many reasons for a manufacturing organization to implement preventative maintenance software. To achieve ROI, the investment of preventative maintenance technology will pay for itself over a reasonable time. A piece of solid advice if you deal with multiple machine downtimes per year, don’t wait for another breakdown to happen. Be proactive and prevent all minor and major catastrophes by stopping the problem before it starts.
Not sure which machine metrics to track? Register for our Lean Manufacturing Metrics in i4.0 webinar to have your manufacturing metrics questions answered by our smart factory experts!