Process-industry executives depend on their equipment to achieve profitability — which means they’re keenly aware when a critical piece of machinery doesn’t run as scheduled.
Unfortunately, for many plants, that’s far too often.
The PSbyM Process Industries Performance Study found that machine uptime (as a percent of scheduled uptime) is only 67 percent (average) at process plants. That means that these facilities’ machines are not available a full third of the time that they’re required with one-quarter of downtime resulting from major breakdowns.
Even worse is the performance at the bottom third of process plants: they report less than 50 percent uptime. If machines don’t run, then orders don’t ship, sales are delayed (or lost altogether), and the customer relationship is tarnished (or even permanently destroyed).
- Machine breakdowns also damage the bottom line in other ways at process plants:
- Maintenance-repair labor (regular and overtime) costs — 73 percent of plants incur these costs weekly, daily, or constantly.
- Production catch-up labor (regular and overtime) costs — 69 percent of plants incur these costs weekly, daily, or constantly.
- Machine replacement-parts costs — 58 percent of plants incur these costs weekly, daily, or constantly.
- Extra shipping costs (e.g., replacement parts, temporary equipment) — 57 percent of plants incur these costs weekly, daily, or constantly.
- Extra product costs (e.g., damaged during breakdown, damaged during ramp-up) — 56 percent of plants incur these costs weekly, daily, or constantly.
Why so much downtime? Two root causes:
- Unplanned maintenance — 21 percent (average) of plants’ maintenance work is unplanned; 10 percent of plants report that half of their maintenance work is unplanned.
- Excessive changeover time — changeover time for plants’ primary production lines/processes is 42 minutes (average); a third of plants report changeover times of an hour or longer.
Even in plants that don’t seem to have uptime problems, other issues lurk: machines run at less-than-expected yields; poorly maintained equipment is managed at lower speeds to avoid breakdowns; equipment produces low-quality batches that are scrapped or sold at discount; or equipment operates at speed, but with safety risks.
What is the Cost of Downtime?
When machines run as they are designed to do, they produce product which, when sold, yields the company the revenue to continue to operate. Far too often, machines do not run as they should, and this downtime can impact the bottom line of a company’s Profit and Loss (P/L) statement.
When we consider downtime cost, we begin to think of costs such as labor and supplies. These are valid costs of downtime as labor and supplies are used to restore the equipment back to running condition. However, other costs are incurred as the machine sits idle. We can view these costs as visible and hidden.
Visible Costs of Machine Downtime
Visible costs of downtime are those costs that we can see impact the bottom line of our P/L statement. The labor and supplies that are used to repair the machine are certainly in this category along with the labor cost of the idle operator (if they are not directly involved in the repair).
Lost production is a cost that must also be considered. If a plant is fully scheduled and utilized, every part that is not produced is lost and cannot be recovered with overtime production. Even if a plant is not fully scheduled, any product that is not made during normal operations must be produced using extra labor and/or machine time. Typically, extra labor can cost 1.5 times as much due to overtime while extra machine time can cost production of another product.
If a machine is down and not producing, revenue from that machine is not coming into the facility. For example, a machine makes widgets that are sold for $50. The machine makes 500 widgets per hour. If the machine is down for an hour, the company loses $25,000. Downtime can quickly become expensive!
If our widget machine breaks down and requires a part that costs $1,000, and needs 3 mechanics making $25 per hour, our total cost for the downtime is now $26,075.
Hidden Costs of Machine Downtime
The financial costs of downtime are only part of the total picture. There are hidden costs of downtime that never make their way to the P/L statement. These costs can also have much larger implications and longer effects than just dollars and cents.
- Safety is at risk. When a machine breaks down, mechanics, technicians, and even operators begin to work on the machine. While we want them to work on the machines, this work is not standard and can expose operators and mechanics to different hazards and conditions. When our employees work in “non-standard conditions” there is a higher risk for safety incidents that can be magnified as there is significant pressure to get the machine back online. Increased pressure leads to distracted and hurried workers which lead to people taking chances.
- Morale is affected by downtime. When machines do not run the way they were designed, people become frustrated and disheartened fighting to get machines to run right. This frustration can lead to job dissatisfaction and further lead to turnover. Low morale and high turnover are consequences of high downtime conditions.
- Customers can be impacted by downtime. If machines do not produce goods in the manner they should, product can be late to customers. Late orders do not please our customers, and the late orders could lead a customer to seek out a more reliable source for their needs, usually our competitor.
These “hidden” costs of downtime can find their way to the P/L. Safety problems result in higher overtime for covered jobs, higher turnover means higher costs for training and overtime covering open jobs, and when customers go to our competitor we lose top line sales, which ultimately impacts the bottom line.
How to Improve Machine Uptime
Equipment operators and managers with access to data on machine performance may be aware of these issues in the moment or across a shift, yet fail to recognize their cumulative long-term impact on plant productivity and performance. And in many manufacturing plants, staff simply don’t have access to common machine data and are completely unaware of equipment problems until it’s too late: approximately half of plants fail to monitor machine characteristics including output, temperature, visual appearance, sound, and motor current and circuits. The most commonly monitored machine characteristics — energy usage and product quality — are only tracked by 65 percent and 62 percent of process plants, respectively.
We continue to see expectations of maintenance grow and change along with equipment problems and lack of machine best practices. This is because many plants don’t have strategic, routine approaches to maintenance. That’s why three of the nine pillars/principles of the Milliken Performance System (MPS) are focused on improved equipment capabilities, helping Milliken & Co. record impressive machine performances for decades. (One Milliken plant with 160 knitting machines — each with 40,000 moving parts — went nine years without unscheduled downtime.) MPS and these three pillars also have been leveraged for dramatic results by clients of Performance Solutions by Milliken.
Daily team maintenance
This pillar provides operators with the skills to proactively prevent breakdowns and quality lapses caused by equipment deterioration, and helps to reduce minor stops, breakdowns, and changeover time. Daily team maintenance also promotes operator ownership of equipment; machine operators are usually the first to notice that equipment is not running properly and must deal first-hand with equipment when malfunctions occur.
Maintenance technicians, leadership, and engineers establish maintenance schedules to address problems before they occur, focusing on routine preventive, predictive, and zero-failure activities. These practices help increase equipment life, enhance availability and maintainability of the equipment, and can prevent costly problems before they occur.
Early equipment management
This pillar coordinates capital expenditures with long-range plans and leverages equipment data, equipment modeling, and best practices to improve reliability of new machines, designing out losses related to equipment startup before they occur. Early equipment maintenance brings together all necessary functions at the appropriate time to effectively plan, design, manufacture (purchase), and start up new equipment at the expected cost and performance rates. This allows for flexibility for current and future products and offers a systematic method that involves the right people at the right time, reducing risk.
For optimal equipment performance and reduction of breakdowns, the Daily Team Maintenance and Planned Maintenance pillars are implemented together through a four-phase approach — 1) reduce breakdowns, 2) lengthen equipment life, 3) implement periodic maintenance, and 4) predict equipment life. This integrated approach increases OEE (overall equipment effectiveness), makes cost reductions achievable, and begins to change the expectations of operators and maintenance staff, which results in better care for equipment and elimination of breakdowns. This shift also allows maintenance technicians to focus more time on troubleshooting major problems, improving equipment before problems occur, and increasing their knowledge and application of the latest technologies and equipment that can benefit their plants.
The PSbyM Process Industries Performance Study highlights how process-industry executives can achieve improved levels of availability, revenues, and profits from their capital equipment. Does your plant have a performance management system and principles in place to improve equipment operation? If not, sign up here to receive more news and analysis, and to learn how Performance Solutions by Milliken can create a culture that drives operational improvement.