The Total Cost of Downtime from Equipment Breakdown Can Quickly Tally Operating Fortunes

The total cost of downtime when plant, equipment and machines breakdown can accumulate into fortunes. The impact can quickly extend business-wide, and in the worst cases affect the entire organisation, and even its customers.

Once a critical equipment part fails operation stops. Every defect in operating plant and equipment components companies allow to exist puts production in jeopardy of losing fortunes.

 

Slide 25 – The Defect and Failure Total Cost of Downtime When Equipment Parts Breakdown Goes Company-wide

the total cost of downtime is made up of all the business-wide costs that arise when operational plant, equipment and machinery has a breakdown

 

When equipment breaks down production stops. From the moment of failure to the restart of production no saleable product is made, but a great deal of money is lost to the total cost of downtime.

Shown in the slide above is what happens to production time and costs when operating plant and equipment breakdown. The operation stops at time t1 when the breakdown occurs. Fixed costs continue. But in addition, the breakdown repair now starts taking profit and time away from the business. The total cost of downtime is unknown at the start of the breakdown, but whatever money and resources are needed to return the equipment to operation at time t2 are spent.

Manpower is put into making the repair. Maintenance overtime is authorised. Parts and materials are urgently procured. Specialist contractors are brought in if necessary. On and on efforts and expenditure are put into repairing the breakdown. As the failure continues more and more departments are impacted by the outage.

The Operations and Maintenance groups are initially affected by the plant breakdown. If production does not soon return the Managers from other departments get involved. Emergency meetings are held, and resources are reallocated. More people join the breakdown if customers start to be impacted. When the Dispatch team and Sales group contact customers to advise them of the delay they too become part of the total cost of downtime.

As consequential impacts grow, more time, resources, and effort go into the repair. The company spends whatever is necessary to get back into production. In numerous ways more and more resources and costs get siphoned into the failure. A great deal of money can be quickly paid out, and a far greater value in profit lost. Ratios of $1 direct expenditure to $30 lost operating profit loss is common from processing plant breakdowns.

Breakdowns Must Never Be Allowed to Happen

The only reason the downtime costs were incurred is because there was a breakdown. No money or time would have been lost if there had been no breakdown. Equipment breaks down when a critical working component fails. At some point in the past a defect was introduced into the component and during operation it led to the breakdown. There would have been no total cost of downtime from the breakdown had there been no defect.

Risks of an equipment breakdown and fortunes in operating profits lost at some point in the future arise as soon as a defect is introduced into a component. The total cost of downtime because of a small component’s failure can be enormous. In large operations it can tally hundreds of thousands of dollars each hour the breakdown continues.

It makes a powerful business case to proactively stop defects in your operating plant and equipment. Without a defect there is no component failure and no loss of future operating profits.

 

This slide is a companion to the new Industrial and Manufacturing Wellness book. The book has extensive information, all the necessary templates, and useful examples of how to design and build your own Plant Wellness Way enterprise asset life cycle management system-of-reliability. Get the book from its publisher, Industrial Press, and Amazon Books.

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