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How to Calculate the Cost of Downtime
Several indicators allow for better management control over departmental processes. For a more accurate analysis of overall company performance, it is useful to use monetary values as a reference. This means it is possible to calculate potential gains and losses with greater precision in a given process.
When analyzing an unexpected failure in a specific piece of equipment or production process, a valuable indicator is the cost of downtime. Through calculations, it is possible to quantify the loss incurred and understand how much it costs the company, whether for a single piece of equipment or the entire production line, over a given period.
Understanding the Calculation
The calculation of downtime cost on the production line is based on the operating cost of a piece of equipment. To arrive at this figure, you must consider the labor cost, which is the hourly rate for each employee involved. In addition, the raw material cost includes all materials required for the process. Finally, general production costs, which essentially cover electricity, water, equipment depreciation, and so on.
Keep in mind that all expenses inherent to each of these three items must be accounted for. In the case of labor, for example, employee benefits such as transportation and meals must be included. For raw materials, calculate freight, storage, and other related costs.
With this information, you will have the gross value of the production process for that specific piece of equipment. To determine the cost of one hour of machine downtime, you must also add the maintenance cost, which includes labor, tools, external services, and more.
When laid out clearly, it becomes evident that this represents a loss no one wants to incur. Therefore, it is essential to invest in preventive maintenance measures to eliminate unnecessary risks and reduce production stoppages.
Preventive Measures
Preventive actions must be taken with consideration of the events that have occurred on each piece of equipment. There is no better way to prevent failure than to learn from it and define an action plan in case it recurs. The set of methodological actions to prevent failures and breakdowns is a fundamental part of maintenance management.
Invest in a methodology for handling unexpected failures, such as the cause-and-effect diagram in maintenance. This type of strategy allows incidents to be classified into different categories. The goal is to consolidate information about stoppages into a document that enables error analysis and corrective action to prevent recurrence.
These categories facilitate the work of maintenance technicians and managers alike by identifying the root causes of problems that often result in production stoppages, such as issues related to the method used, the material, the labor, or the machine itself. Different criteria should be defined based on each company’s specific characteristics.
Leverage Technology to Your Advantage
With technological innovations across industries, putting technology to work in your favor is essential if you intend to perform smarter, more effective maintenance management. Engeman®, for example, is a tool specifically developed for maintenance planning and control. Its implementation enables the resolution of various issues related to a company’s production flow.
One of its most valuable applications is machinery maintenance management. Within it, you can schedule and control preventive and predictive maintenance for each piece of equipment, and define both periodic and predefined intervals for execution. In addition, it allows you to monitor variables that indicate a tendency toward failure, such as pressure, vibration, or oil quality.
For each event, even those that do not cause a machine stoppage, you can register a work order in the system, giving you access to each machine’s complete maintenance history. It functions like an extremely detailed medical record for each piece of equipment.
It is worth noting that when acquiring industrial equipment, it is essential to follow the manufacturer’s recommendations regarding maintenance intervals, parts replacement, and other adjustments.
This way, you will not rely on technicians’ guesswork. Simply enter this information into the system and manage the maintenance work routine to eliminate unnecessary failures and unplanned stoppages.
Actions to Take During a Production Line Shutdowns
Even with excellent management practices, encountering an unexpected event is inevitable. Therefore, it is necessary to know how to act promptly in the event of a production stoppage. The most effective way to do this is by developing an action plan.
First and foremost, it is essential to keep employees trained for incident scenarios. Everyone’s safety must come first. Therefore, if an accident involves someone, address that before taking any other action.
Once that is resolved, do not let the heat of the moment or employee anxiety lead to a poorly planned response. Gather information to analyze what occurred before making any decisions.
Key Questions
What is the problem, exactly? Even if the answer is as straightforward as “that part broke,” it is important to ask yourself and those involved. Next, identify the root cause of the incident in order to assess which processes will be affected.
With that established, it will be possible to calculate the damages, as well as the cost of downtime, and analyze the corrective actions required. Improvised solutions often come up and should be avoided whenever possible.
Corrective maintenance requires intelligent planning to resolve the situation and minimize damage. It is part of the management role to handle these problems and, subsequently, study them in order to implement preventive measures and avoid future production line shutdowns.
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