Production downtime is not only costly, but common – making it a multi million dollar problem for businesses. Here we examine manufacturing downtime in detail, including what it is, what causes it, and what it can cost your business.
We also look at ways to prepare for and prevent this expensive issue. Because even small manufacturing firms with limited capital can reduce the risk of suffering unexpected outages through measures like preventive maintenance, staff training and the use of smart manufacturing software.
What is downtime in manufacturing?
Manufacturing downtime is any period in which a manufacturer is no longer producing goods – commonly due to equipment failure, scheduled asset maintenance, and other causes like problems with labour or supply.
Recent research indicates that businesses experience downtime frequently: in the three years leading up to ServiceMax’s 2021 paper on downtime, 82% of companies they surveyed experienced downtime.
Planned vs unplanned downtime
First, a basic distinction: downtime can either be planned or unplanned.
Unplanned downtime occurs when there is an unexpected event like equipment failure, or an interruption in the supply chain. Alternatively, downtime can be planned – for instance, manufacturing equipment can be halted for preventive maintenance.
Either way, when not managed properly, downtime can lead to major problems for businesses.
What is unplanned downtime?
Unplanned downtime is a catch-all term for when production is halted for unexpected reasons. There may be little to no notice of the holdup, and it could last for any number of hours or even days.
What causes unplanned downtime?
Some causes of downtime are quite predictable – and therefore preventable – while others come out of nowhere.
Here we look at the causes of unplanned downtime, which fall under the three broad categories of asset failure, supply chain issues, and unforeseeable events.
1. Asset failure
The most common cause of unplanned downtime is a breakdown, malfunction or total failure of an asset – either equipment or software. ServiceMax’s 2021 research paper on downtime found that this occurs in almost half of all outages.
Possible causes of asset failure include:
- Machine jams and parts failures. These can cause equipment malfunctions and downtime.
- Mechanical overload. Even with all the care in the world, parts can break due to mechanical overload, leading to unplanned downtime. After hardware and software failures, ServiceMax’s 2021 research showed this is the second most common cause of unplanned downtime.
- User error. Skilled operators and/or technicians are required to use and maintain the wide range of machinery manufacturers use. This leaves scope for human error, and it takes just one mistake to cause a problem with a piece of equipment.
- Cyber attacks. Cyber attacks are becoming increasingly common and can shut down a manufacturing business. Ransomware attacks can lock a business out of its own IT systems so they only regain access if they pay the hackers. And even when a ransom is paid, some companies do not get their data back. Manufacturers and distributors are at risk of attacks like this: half of these businesses were hit by a cyber breach in the 12 months prior to Sikich’s 2019 survey.
2. Supply chain issues
A lot of discussion on unplanned downtime focuses on asset failure, but downtime can also be caused by a lack of raw materials. Common reasons for shortages of raw materials and stockouts include:
- Unexpected changes in customer demand
- Issues upstream in the supply chain
- Unachievable promises made to clients
- Inadequate visibility and oversight of lead times
- Insufficient safety stock levels
- Assigning inventory to multiple production runs by accident
- Expiry of inventory
3. Unforeseeable events
Spontaneous events like floods, fires, earthquakes and power outages can all lead to downtime – but that doesn’t mean manufacturers can’t protect their business from these problems at all.
We’ll take a look at how businesses can plan for – and prevent – unplanned downtime in the last part of this article.
What effect does unplanned downtime have on a manufacturing business?
Unplanned downtime can have a significant effect on a manufacturing business, including:
- Upset customers and partners since these do not receive what they paid for on time, if at all
- Lost business due to an increase in upset customers and partners
- Significant losses from lost business – plus equipment and staff being idle, and raw materials spoiling before they can be used
- Compromised staff safety as many safety issues occurring during start-up and shutdown operations. Staff dealing with unexpected downtime also have less time to consider safety hazards
- Lost data due to damaged or breached IT systems
What is the total cost of unplanned manufacturing downtime?
To give you an idea of the potential financial impact – and seriousness – of unplanned downtime, we’ve put together some statistics from recent research:
- Aberdeen Strategy & Research estimated the average hourly cost of downtime for businesses was US$260,000 in 2016 – up 60% from 2014.
- Research by ServiceMax in 2021 found that on average businesses experienced four hours of downtime each time it occurred. Based on this and the data collected by Aberdeen Strategy, this suggests that the average downtime outage costs over US$1 million.
- The costs of downtime may be higher for manufacturers. In a survey by IT Intelligence Consulting in 2017, manufacturing had the fifth highest downtime costs. The manufacturers surveyed reported that on average downtime cost US$8.5 million per hour.
- Cyber breaches are costly causes of downtime. According to IBM’s Cost of a Data Breach Report, the average cost of a data breach in 2021 is US$4.24 million – the highest average cost in the 17-year history of IBM’s report.
Planned downtime: What is it, and why would you want it?
Planned downtime is the act of shutting down assets in order to repair, maintain, test or upgrade them. These assets can be hardware or software, and their downtime can either be planned for as a part of company policy or scheduled as needed.
Planned downtime is often used interchangeably with scheduled downtime, but strictly speaking these two types of expected downtime are distinct:
- Planned downtime. This is when shutting down a piece of equipment is written into company policy. For example, a business might stipulate that ‘every 200 hours of operation this piece of equipment must be lubricated’. This is, in essence, downtime as part of your business strategy.
- Scheduled downtime. This is when downtime is scheduled and a technician is assigned to the task. An example is when a technician is booked to repair a broken asset – in this instance, unplanned downtime becomes scheduled downtime. Preventive maintenance can also be scheduled in advance, such as when an operator notices wear and tear, or a service indicates future repairs will be needed.
We can break planned downtime into different maintenance strategies:
- Run-to-failure is when an asset is deliberately run until it breaks, at which point it is repaired reactively.
- Reactive maintenance is what it says on the tin – fixing things only when they break.
- Preventive maintenance is the regular servicing of equipment to reduce the likelihood of failure.
- Condition-based maintenance is when repairs are made based on the condition of the equipment. In a sense it is both reactive and preventive, since the decision to undertake repairs before equipment fails is based on its condition.
- Predictive maintenance is the act of maintaining equipment based on predicted failures, predictions generated from data analysis and smart sensors monitoring for anomalies and trends.
What are the benefits of planned downtime?
Given how costly disruption to equipment can be for manufacturers, why do it at all?
By planning for downtime, you can:
- Avoid unplanned downtime. It’s generally easier to maintain and service equipment rather than fix it when it breaks, meaning the downtime doesn’t last as long. Since you know the downtime is coming, you can ensure you have the tools, expertise and spare parts to perform the maintenance – which means less waiting around.
- Extend the lifespan of assets. By keeping on top of servicing and maintenance, you can keep equipment operating optimally for longer.
- Cause less disruption. Scheduling downtime means you can plan for it to occur during periods of low or no activity, when it will be less disruptive to operations.
- Maintain IT security. Regularly maintaining and updating software ensures it’s up to date with the latest security standards.
How can you get downtime under control? 7 tips
Here we offer you seven processes to help you avoid – or minimise the effects of – costly unplanned downtime.
1. Perform preventive maintenance
Using shorter periods of planned downtime to service and maintain equipment – whether you’ve planned for it as a policy or base this on the condition of the equipment – can limit the number of equipment malfunctions and reduce downtime.
Long term, it’s important to keep track of breakages, malfunctions, and the number of times you repair or replace parts and components – as well as the cost of repairs and maintenance.
From this you can paint a picture of what your equipment is costing you over time, and make smart evidence-based decisions on what to invest in and what to retire. It may be that it’s more cost-effective to invest in new machinery.
2. Upgrade hardware and software where possible
No matter how effective your maintenance, at some point your assets will go beyond their use-by date and finally irreversibly break down.
Investing in new assets may save money in the long term. A new piece of equipment can potentially do the job more efficiently and may be equipped with other cost-saving features.
A sensor might give you a warning signal to prevent mechanical overload, for instance – meaning you can avoid costly downtime and save money on repairs.
The same goes for software. Modern programmes can quickly outdate legacy systems in terms of functionality and security.
For SMEs, software-as-a-service (SaaS) companies provide a good solution since their subscription model does not require a large capital investment, and the software provider is responsible for updates, typically patching and improving the product at no extra cost on a fortnightly basis.
3. Audit your business equipment
Auditing your assets is a time-consuming but worthwhile exercise. Auditing will give you an understanding of what equipment you have, how old it is, and how much it costs to run.
Think about obsolescence. Does the manufacturer of your equipment still offer support and parts? Is the equipment losing efficiency due to age? What does the support network look like for the equipment?
You may find it’s more cost-effective overall to get rid of old assets and invest in new ones.
4. Invest in staff training
Investing in your staff is another key factor to get the most out of your equipment. Manufacturers can minimise the risk of human error by providing clear procedures, comprehensive training and a recovery strategy if an error is made. Investigating and recording human errors helps inform these steps.
You might also consider investing in specialist training for your existing staff to give them more technical expertise so they can spot malfunctions early and/or diagnose problems as they occur.
Because employees use equipment daily, it is possibly more cost effective to invest in their training than employ specialist technicians.
5. Take steps to ensure cyber security
Minimise downtime caused by cyber attacks by ensuring your data is backed up and by using two-factor authentication.
Human error is another factor in cyber breaches, since hackers use sophisticated methods to manipulate people into downloading viruses or letting hackers into IT network.
Again, consider investing in basic cyber awareness training to ensure your staff know how to spot danger – whether they’re reading emails, on social media or browsing the web.
6. Plan for unforeseeable events
It’s impossible to know when a spontaneous event like a flood or fire will affect your business. But you can still plan for these events to some degree by considerations like choosing the right location for a factory, ensuring the building is sound, writing contingency policies and investing in backup systems or facilities.
For SMEs, some of these measures may be out of reach, but you can still take measures to mitigate the effects of these events – like having an emergency operations plan and ensuring your data is secure.
7. Improve visibility over inventory and purchasing
In modern manufacturing, visibility over your operations is critical, allowing you to make smart, evidence-based decisions on what stock levels to maintain, and how demand will look in future.
Effective manufacturing software can solve many problems with supply issues that cause downtime by giving you real-time information on existing stock levels, a record of how long stock has been there, and a record of incoming and outgoing inventory.
Manufacturing software like Unleashed allows you to take lead times into account, set low-stock alerts and reorder goods quickly – which means you can avoid problems like insufficient safety stock that can cause unplanned downtime.
Additionally this software provides data that shows the rate at which different products sell, plus previous sales trends, which allows for more accurate forecasting – which in turn helps you avoid stockouts, while minimising the stock you have on hand.