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Downtime: The Kryptonite That’s Making Your Company Powerless

​Downtime can be a tricky thing to get a hold of in industry. A lot of companies fail to see the true cost associated with it. Without fully knowing how much it can be hurting the bottom line, it is hard for management to make the proper decisions around it. Downtime can be defined as the period during which equipment or a machine is not functioning. It may be due to technical failure, machine adjustment, maintenance, or non availability of inputs, such as materials, labor, or power. Average downtime is usually built into the price of goods produced, to recover its cost from the sales revenue. There are really 3 main categories that the true cost of downtime can be put into.

Equipment Cost Category (Constants)

  • Categories. Standardize your data collection categories, learn from MIMOSA.
  • People. Indirect labor cost can often be greater than the more apparent direct labor cost.
  • Product. Made up of two sub-categories, cost per unit and units per hour.
  • Start-up. Every time you startup your machine, there is hidden cost.
  • Bottleneck. Using a process flow diagram, predetermine a bottleneck factor for each asset.
  • Sales expectation. Our goal is always to maintain a 100 percent capacity readiness.

Labor Cost Category (Constants)

  • LPP/M. Do your LPP/LPU calculations include indirect labor?
  • QC. Associate QC cost, rework, etc., with actual downtime occurrence.
  • Maintenance. There is a substantial staff supporting those one or two who actually do the machine repair.
  • Engineering. Engineering costs to support troubleshooting and repair of machines can slip through the cracks.
  • Management. Requesting maintenance, redirecting operators, reporting to upper level management, altering production schedules/flow, administrative tasks, etc.

Downtime Cost Category (Occurrence)

  • Time. Are you tracking when maintenance arrives at the scene, or when the machine actually went down?
  • Reduced Production. Time and percentage of full capacity equipment is running a reduced rate due to a malfunction.
  • Scrap. On continuous flow systems, scrap related directly with downtime can be a very significant cost.
  • Band-Aid. Please take note that Band-Aid time estimates, and amount of times needed to be done are usually underestimated.
  • OEM, consulting, contractor. Your interactions with OEMs can be a major cost factor in downtime as well as other areas.
  • Tooling. Often classified as a nuisance problem if allowed to continue, can really add up in cost.
  • Parts/Shipping. Out of the parts and procurement fields, the actual parts cost is the only value commonly tracked. What about shipping, locating, rentals?

Once you truly understand all of the aspects that go into downtime, you will then be able to see the true cost of downtime. The next step is finding a system that will work for your particular organization to capture this information and decide what to do with it. There are many places to go to find guides on calculating OEE (overall equipment effectiveness). It can be most simply stated as Availability X Performance X Quality = OEE.

Availability - Measures the percent of time the equipment can be used (usually total hours of 24-7-365 for equipment utilization, or scheduled production time to result in a reliability only measurement), then divide by the equipment uptime (actual production).

Performance - The percentage of available time that the equipment is producing product at its theoretical speed for individual products. It measures speed losses (e.g., inefficient batching, machines jams). If you cannot obtain equipment specifications from OEM, use best recorded rate of PPH/quality.

Quality - Determining the percent of the total output (i.e., all products including production, engineering, rework, and scrap) that is good.

Perhaps one more thing to consider is that you could be using the machines themselves that have PLCs and HMI to do all of the OEE calculations for you, and get as technical as you would like the information to be.