Second in Our Series: Managing in the Economic Re-Set

NEGATIVE EFFECTS OF DOWNTIME

The true cost of downtime is usually much more than is reported. This is due to the fact that downtime eventually weaves its negative effects throughout everything a company does. Consider the effect downtime has on the wear and tear of other properly operating equipment, the stress it causes to workers and management, the impact it has on employee morale, the product quality issues that may arise, complaints by customers, and the time and money lost because of all these extra circumstances. Downtime at your facility can even directly affect the local and national economy.

DETERMINING THE TRUE COST OF DOWNTIME

There are a variety of methods and calculators for determining downtime costs. In general however, you need to calculate:

-How many employee hours are lost to non-productivity while the system is down, and then convert those lost hours into dollars
-How many hours maintenance and other personnel spend repairing and getting the system back up and running, and convert those lost hours into dollars
-How many hours the facility or unproductive machinery is burning up energy and resources, and convert those lost hours into dollars
-How many hours management and administrative employees spend researching replacement parts, expediting orders or doing other “rush” related work, and convert those lost hours into dollars
-How many hours customer service or sales personnel will spend explaining the downtime to customers and the effect it will have on them, and covert those hours into dollars
-How many sales are lost due to the downtime, and convert those lost sales into dollars
-How many customers are lost due to the downtime, and convert the future value of those customers to dollars.
Add all these figures up and add 10 to 20% to account for the less visible or intangible damages associated with downtime like lower employee morale, stress related non-productivity, negative publicity, etc. and you arrive at a minimum cost of downtime.

AVOIDING DOWNTIME

Clearly, the “best defense” as they say, is a “good offense”. This means being “proactive”, and not “reactive”, in your maintenance responsibilities. Running a plant on a proactive maintenance basis makes your work much more efficient, productive, profitable, and less stressful. This is because being proactive is the best way to reduce and eliminate downtime.