23
July
A Guide to Manufacturing Downtime and Reducing Costs
July 23, 2024
In Blog
In the manufacturing industry, time is equivalent to money. Efficiency is the primary requirement in this sector, where even a slight production delay of a few minutes can have a significant financial impact. This throws light on the concept of “downtime”—a period of inactivity or non-production that every manufacturer fears, “manufacturing downtime”. But how is the cost of downtime determined? We’ll explore this concept in depth in this blog and provide you with comprehensive information about the subject.
Reducing downtime is one of the key objectives in manufacturing operations , as it reduces expenses and mitigates hazards while increasing production. Therefore, many companies use OEE as downtime tracking software to help decrease downtime in manufacturing operations. However, to achieve this, it is important to understand the reasons behind downtime.
What Is Downtime?
Downtime is any period or the total amount of time during which a process is not active. Please note that not all downtime is the same, and it can be divided into two types: planned and unplanned.
What Is a Planned Downtime?
Planned production downtime occurs when production schedules a period to shut down the process. During planned production downtime, the machines are usually maintained through inspections, cleanings, and part replacements.
Planned downtime allows operational planning, scheduling, and preparation. While the process is down, staff can organize tasks to be completed, order parts, and communicate with stakeholders. Planned downtime can be set up to ensure that staff members have specific tasks to perform and all the required resources and tools are available at their disposal.
What Is an Unplanned Downtime?
Unplanned production downtime occurs when a machine or process is unavailable due to an unforeseen circumstance. An unplanned downtime can occur due to a component breaking, running out of supplies, a power outage, and so on. Unplanned downtime events are unpredictable, therefore, you should focus on managing them in a better way to minimize the overall downtime cost.
The Value of Cutting Down on Unplanned Downtime
Unplanned downtime tends to be more expensive and hazardous than scheduled downtime. Since unexpected downtime does not occur with a warning, there are many potential causes for the production process to stop, and preparing for every potential issue is impractical.
If components or the appropriate staff are not available when a problem arises, the machine may not operate for a longer period of time. Longer downtime means less time spent on producing goods, that has an immediate negative impact on profitability.
Wasted material and unsellable goods are additional expenses linked to unplanned downtime. Poor quality output is typically produced just before, during, and after the process shuts down and restarts.
Additionally, unplanned downtime may result from mishaps or near misses. During unforeseen downtime, the objective is to restart the machine or process as quickly as possible. During such an urgent scenario, people may get panicked and respond inaccurately rather than pause to consider the best course of action, leading to a stressful and chaotic workplace environment.
Minimizing unscheduled downtime can decrease overall manufacturing downtime costs. It also lessens the amount of time workers are put in erratic circumstances, reducing the risk of accidents.
Ways to Reduce Downtime
Manufacturing downtime may occur for several reasons, so it becomes imperative to use various strategies to minimize them in the workplace. Some of these strategies are;
Monitor Downtime
It’s crucial to track downtime before taking any action to minimize it. Monitoring downtime gives you an insight into why the process is failing and helps you understand the overall performance of the process.
For every downtime event, you should collect the following information:
Using the compiled information based on historical data can provide you a clear idea of where how, why and even who might be the possible root cause of downtime. This allows you to make plans or changes based on predictive analysis, thereby preventing, limiting or avoiding future downtimes.
Additionally, you should consider collecting data on waste accumulated over time, safety issues, environmental events, and so on.
Early Warning With Continuous Downtime Alerts in Production Tracking
A system to monitor production can also help reduce downtime. Operator stations with visible process trends can see how the process is operating over time and track whether factors change or remain static.
Alarms can alert operators about any unbalanced conditions either on their own or in combination with dashboards and trends. This might enable them to respond faster and possibly avert a downtime event.
Make a Schedule for Preventive Maintenance
Preventive maintenance is carried out while the process is in operation or during scheduled downtime. Replacing a part during scheduled downtime saves time and the cost of downtime in manufacturing by enabling the site to order the appropriate parts and ensure that the right people are present to complete the duties.
The parts can last longer if regular maintenance is performed while the process is in operation, such as cleaning and lubricating oil additions or changes.
A schedule can be monitored to ensure tasks are completed on time. If a task is missed, an operator reminder or a supervisor alert can be sent. By documenting preventive maintenance data, sites can examine it in conjunction with process and downtime data. Correlations may appear and help direct required maintenance and minimize downtime.
Provide Decision-Making Support to Operators
Since unplanned downtime is unavoidable, efforts should be made to reduce its duration. Operators who have access to tools and troubleshooting manuals in case of an outage can restart the process faster to minimize the impact of the downtime.
Operators must determine the reason behind the process’s initial failure in order to restart it. Giving operators the tools they need to identify the problem’s real cause is essential to a speedy resolution.
Conduct a DMAIC Analysis
These are a few places to start when trying to reduce production downtime. The DMAIC method (Define, Measure, Analyze, Improve, Control) is an essential tool for lean manufacturing that can be used to save downtime.
Define
First, identify the process, the point at which it is deemed to be down, and a list of plausible causes. Then, find out how each process is detected as running or not running. The variable can be utilized as long as it has a distinct value that indicates whether the process is in operation or not.
Measure
One of the most important steps in reducing downtime is measuring it and giving it a purpose. Remember to record the downtime events: who, what, when, where, and why.
Analyze
After it has been documented and classified, downtime can now be examined. Apart from the event's duration, consider additional essential process data such as safety concerns, environmental dangers, or material waste to determine the right downtime cause to target.
Improve
When determining the root cause of downtime, seek solutions to prevent the event from happening in the first place and to restart the process when it occurs unexpectedly. Both strategies are required to cut down on downtime.
Control
Ensure the reductions are maintained by measuring and analyzing the downtime continuously. It is always a good idea to develop workflows and SOPs (standard operating procedures) to keep everything under control.
What Is the Cost of Downtime Manufacturing?
In the manufacturing industry, “downtime” refers to when a machine or production line is not in use or malfunctioning, leading to a production stop. This downtime may occur unexpectedly due to unforeseen organizational problems or unanticipated maintenance or during periods when there are no orders.
The financial loss a business incurs during these unproductive times is known as the “cost of downtime.” It’s a significant outlay of money beyond the actual loss of productivity. It also covers incidental costs like labor costs for underutilized staff, reputational harm from missed deadlines, and even fines for late deliveries.
How to Calculate Cost of Downtime in Manufacturing?
Each manufacturer’s unique set of conditions heavily influence the formula used to calculate downtime costs. Nonetheless, a more universal strategy might be expressed as follows:
Downtime Costs = Direct Cost + Indirect Cost
In this case, lost production value, squandered raw resources and repair costs are all considered as direct costs. Examples of indirect costs include missed sales opportunities, extra labor expenses, and reputational harm to a company. Considering this, the following would be a more intricate formula to calculate downtime cost:
Downtime cost = (Duration of downtime * Cost per minute of downtime) + (Lost revenue due to downtime) + (Cost of overtime) + (Cost of reputational damage)
It is important to remember that determining the precise cost of downtime can be challenging. Nonetheless, by applying the calculation formula mentioned above, you can obtain an approximate downtime expense and make sensible decisions regarding the mitigation of downtime risk.
Additional information regarding the downtime costs formula is provided below:
- Minutes are commonly used to measure the length of downtime.
- Usually, the cost per minute of downtime is estimated using the expenses incurred due to lost revenue, productivity, and overtime.
- The average revenue earned per minute is usually used to evaluate the lost income due to downtime.
- The price of labor, supplies, and machinery needed to get the system back up and running is usually used to determine the cost of overtime.
- The first cost of overtime is the productivity loss during scheduled hours, and the second cost is the additional time spent on overtime.
- Reputational damage is usually valued as a cost, based on the loss of customer goodwill and the expense of marketing and advertising to restore the damage.
The Effects of Downtime on Manufacturers
Although it isn’t possible to completely avoid downtime, manufacturers can take proactive measures to reduce the impact and frequency of unproductive events by being aware of the costs associated with them. Using real-time data is definitely one way to reduce downtime.
The actual cost of industrial downtime is a complicated topic with wide-ranging effects. The exact cost of production involves a range of direct and indirect expenses that can have a substantial impact on a manufacturer’s earnings, in addition to lost production time. In this fast-paced manufacturing world, manufacturers can preserve their competitive advantage and protect their operations by understanding these expenses and taking action to reduce downtime.
To Sum Up
Different strategies and efforts are needed to reduce the unplanned costs of downtime; the key is to choose the appropriate tools and software for tracking and monitoring such unproductive events. Real-time data is required to prevent such events from happening in the future and to shorten production downtime.
You can limit downtime in the manufacturing process by using an effective downtime tracking software to record, arrange, and analyze downtime incidents. One of our state-of-the-art manufacturing systems, Smart Factory MOM, combines process monitoring and downtime tracking into a single, user-friendly application, enabling manufacturers to maintain a competitive edge and optimize manufacturing operations.
Contact us today to learn more about how we can help you implement, train, and maintain the Smart Factory MOM solution and count on us to help you overcome any hurdles along the way.
