Industrial Downtime has Many Costs Industrial downtime is a major problem in a manufacturing operation. Imagine the effect if a company’s CNC Milling Machines, 3 Axis CNC Milling Machines, Gang Tool Lathes, Manual Mills, Milling Machines, Milling Machine Vises, Multi-Axis Tool Machines and other equipment goes off-line. Even though machines are more reliable than ever, there are still problems with parts failing, hardware breakage and software glitches. These can result in work stoppages that have a severe cost to any business. Research by Dunn & Bradstreet indicates that 49% of the Fortune 500 have experienced at least 1.6 hours of downtime per week. That’s more than 80 hours, or two normal work weeks, of downtime per year. Costs for those non-productive hours vary across industries and obviously rely on business size, the timing of incidents and the nature of the outages. Suffice to say, for some businesses, it can cost many millions of dollars in lost revenue and nonproductive labor. There are also non-direct costs in lost customer confidence, business lost to competitors, orders that are cancelled, and the long-term impact of future outsourcing of work. To calculate the lost revenue for a business, take the average sales per hour, account for any fulfillment that occurs during the stoppages, and you have a rough approximation of the percentage of sales lost. While a rough estimate, it does give a clearer picture of the work stoppage cost. With a publicly traded company, there’s also the issue of shareholder values, which can drop precipitously when stoppages are extensive and publicized. In some cases, there’s the added financial impact and cost of destroying work in progress that must be abandoned because of a breakdown in the industrial processes. Food and pharmaceuticals are particularly affected by stoppages, owing to issues of efficacy and spoilage. Industrial agreements also hold a potentially burdensome poison pill that can be activated by downtime. Some agreements stipulate a level of service that must be fulfilled for customers and business partners. Failure to meet the conditions of the contract can result in severe and
substantial financial penalties. There may also be regulatory issues that come into play with certain companies that do a substantial amount of government work. Finally, thereâ€™s also an issue with businesses that are unable to produce anything during work stoppages. Many processes are now automated, and the knowledge and/or ability to do things manually has been lost. To combat these problems, industrial manufacturers should only purchase equipment from suppliers that can quickly troubleshoot, service, and fulfill parts requirements. Any breakdown may create a unique situation, so it is imperative that the technical staff of your supplier have the capability to respond immediately to any issues. It is equally important that the staff be able to improvise when needed and create solutions and workarounds that can enable manufacturing to continue while more permanent solutions are devised. The clock is ticking and the cash register is not ringing when industrial processes stop. How quickly a manufacturer responds to the issue could be the difference between a glitch and utter disaster. For more information visit http://www.ganeshmachinery.com
Published on Oct 26, 2013
Published on Oct 26, 2013
Industrial downtime is a major problem in a manufacturing operation, but many of the costs associated with a work stoppage aren't apparent a...