Addressing Unplanned Downtime in Asset Intensive Industries

Addressing Unplanned Downtime in Asset Intensive Industries

Avez-vous un quart de million de dollars à gaspiller chaque heure ? Que diriez-vous de 3 millions de dollars ? Nous ne le pensons pas. 

Unfortunately, depending on the industry, losing that much money to unplanned downtime is a real possibility. In fact, in the manufacturing sector in particular (and for asset-intensive industries generally), unplanned downtime can represent the largest single source of lost production.

So what can your organization do about it, and how can you reduce unplanned downtime as much as possible? Read on to learn a little more about the concept, and how some knowledge and a few simple changes can make all the difference. 

What is Unplanned Downtime?

For any production facility, unplanned downtime is one of the inevitable risks of doing business. And just as downtime represents any period of time in which a machine is not in production, unplanned downtime is when this lack of production was unexpected. 

In manufacturing, for example, an interruption of production will result in no actual value being produced, all while overhead costs grow by the minute. So while both planned downtime and unplanned downtime can result in a temporary shutdown and will cost your organization money, unplanned downtime will cause the most financial hardship. 

How Does Unplanned Downtime Occur?

mining-excavator

Unplanned downtime can occur for a number of reasons. 

A machine part might break, or one of the sub-components of that part can fail. In other cases, there could be a slow-down in global supply chains that leaves your production facility without the deliveries it needs to continue operating. 

User error can also result in unplanned downtime, as can labor disputes and walkouts. Natural disasters also can affect your system, resulting in a power outage or even large-scale internet outages and network failures. As we learned in 2020, global pandemics can also affect production levels.

The point is, when production grinds to a halt unexpectedly, the problem needs to be identified and fixed as soon as possible. Ideally, some of these equipment failure issues can be avoided altogether.

Is There an Average Annual Production Downtime?

Estimates vary, but as far as manufacturing goes, organizations can lose anywhere from 5% to 20% of productivity due to a failure that leads to unplanned downtime in any given year. Manufacturers experience approximately 800 hours of average unplanned downtime every year.

However, no matter how much unplanned downtime your organization experiences yearly, it’s clear ending the shutdown quickly is the most important objective. 

What Kind of Organization is Affected By Unplanned Downtime?

industry

According to the International Society of Automation (ISA), unplanned downtime affects a number of industries beyond manufacturing. 

This includes those involved in power generation, resource extraction, pulp and paper, IT, transportation, petrochemical, food and beverage, automotive, pharmaceutical, and even customer service.  

More than this, recent studies show that fully one third of manufacturers experienced unplanned downtime for one or more of their applications, and large companies (with revenues above $1 billion) were at an increased risk of experiencing unplanned downtime.

Alarming Downtime Statistic

According to Garvey, unplanned downtime is associated with several relatively worrisome numbers. 

  1. Across various industries, the average cost of unplanned downtime at a company in these sectors was $260,000 per hour. 
  2. Certain sectors, such as the automotive industry, can see costs that are much higher, up to $3 million per hour
  3. The average cost per incident is $17,000
  4. Human error accounts for up to a quarter of unplanned downtime in manufacturing, a much higher number than in other sectors. Equipment failures are another significant source of downtime.
  5. Up to 70% of companies lack crucial information related to maintenance or upgrades. Worse yet, up to 80% of industrial facilities are unable to accurately estimate their current amount of annual downtime. 

While common estimates for lost productivity point to a range of between 5% and 20% unplanned downtime, the point should be emphasized here: No matter where a business lands in this range, if an organization can’t even measure downtime, how can it possibly stand a chance to properly remedy the situation?

How Does Unplanned Downtime Affect Your Organization?

time-spiral

According to Aberdeen Research, 82% of companies have experienced unplanned downtime at some point over the past three years. As mentioned above, studies performed by the ISA show that almost every operation loses at least 5% of their income to lost productivity as a result of unplanned downtime. 

But a reduction in production is not the only potential negative issue at a plant or manufacturing company. A downtime event can also hurt your reputation with your customers, resulting in loss of customer trust. 

In many cases it takes years to build trust with your clients, customers and suppliers. Unfortunately, in the event of a failure at your company, it only takes a moment to lose it. 

How Do You Measure What Unplanned Downtime Costs?

Along with the reputational damage, unplanned downtime can be measured by collecting data on the cost of the following:

  • Loss in staff productivity
  • Loss in production of actual goods
  • Number of labor hours devoted to rectifying the situation
  • Unexpected costs of repairing equipment

It is extremely important for manufacturers to understand all that they can do about unplanned downtime so that they can implement a solution or prevent issues altogether, resulting in a maximization of production. In many cases, the key to this is having strong data analytics

How Can We Reduce Unplanned Downtime?

steel-manufacturing

There are many ways that organizations can reduce unplanned downtime, particularly manufacturers. They can hold regular staff evaluations and try to improve internal staff communication; they can place a renewed focus on employee training and set well-structured production goals. 

But for many industries, the most important thing you can do is to focus on equipment maintenance, and being proactive (as opposed to reactive) when it comes to tracking equipment upgrades and replacement part availability. 

For example, it might not be immediately obvious to prioritize a large focus on something as simple as a part, asset or subcomponent. But whether it is a breaker switch, an air compressor or a drill bit, when a part breaks down unexpectedly, the costs can quickly spiral out of control. 

When managers consider the cost implications of a broken part or system failures that shut down production entirely, or one that creates a bottleneck that affects dozens of employees (all with very expensive salaries), it makes the proactive approach to asset maintenance and inspection a much more attractive solution. 

This proactive approach has been driving the recent trend towards an investment in digital transformation. Predictive monitoring and well-organized analytics can help companies avoid downtime, and do wonders for the bottom line. 

One of the companies specializing in helping others reduce operating costs, better-manage their capital spending and improve asset availability for quick turnarounds on production slowdowns is Xtivity.

Enterprise Asset Management: How Xtivity Can Help

Organizations understand that there is a shelf life for any type of equipment, no matter how well they are cared for. That said, regular maintenance and a proactive focus on equipment health can extend the life of your critical assets in a big way, also helping to maintain productivity and reducing unplanned downtime in the process.

A common problem, however, is that many operators don’t know enough about their equipment, or how accurate manufacturer recommendations can be with respect to replacement parts. 

How Xtivity can help is by providing software-driven solutions for the Maintenance, Repair and Operations (MRO) spare parts supply chain. Through our cloud-based software and supporting services, we help asset-intensive companies increase equipment reliability, improve cash flow and increase operational efficiency.

The key to Xtivity’s value-add is Pulse, our cloud-based software that helps support and improve decision making. Powered by predictive analytics and business rules, Pulse is a secure, interactive and dynamic web-enabled solution that provides clients with data-driven recommendations, analytics insights and performance monitoring.

Pulse and related solutions, help uncover actionable insights into MRO inventory management, enterprise asset management, purchasing, master data management, and supply chain governance.

Learn more about how you can simplify your MRO Experience here, or visit Xtivity.com to see  how Xtivity’s solutions can help lower potential downtime costs and offer solutions that increase performance – as well as the bottom line.