Annual accounts are a legal requirement and these show a company’s health at a specific point in time. There are many influencing factors, but one usually hidden amongst all the figures is the true cost of unplanned downtime.
Depending on the type and size of manufacturer this cost can vary from £5,472 per hour (RS Components & IMechE Maintenance Engineering Report 2024) to in excess of £30,000 for FMCG and, hundreds of thousands of pounds – or even higher, dependent on industry sector (Siemens Total Cost of Downtime 2024).
Clearly unplanned downtime can have a significant impact on a company’s profitability at best – at worst it may impact their ability to survive. Consequently understanding the causes and what can be done to minimise unplanned downtime is essential.
What makes up the cost of unplanned downtime?
As soon as a production line stops the associated costs begin to mount up. These include:
- lost revenue from goods not manufactured (it may not be possible to replace these).
- items on the production line at the time of stoppage may need to be disposed of – especially if the goods are perishable – and will also include the packaging.
- labour costs for those who cannot work due to lines being down.
- the cost of any emergency parts.
- consequential losses/penalties due to late customer deliveries.
Additionally there could be reputational damage – especially if there are regular occurrences. This could affect the ability to retain existing or even gain new business.
What are the main causes of unplanned downtime?
There are numerous reasons for unplanned downtime, but some key ones identified by RS Components & IMechE (and which would likely also be reflected by Siemens) include:
- ageing assets.
- mechanical failure (may be linked to the above).
- operator error (may be linked to below).
- lack of skills.
- equipment obsolescence.
What can be done to minimise unplanned downtime?
Obviously looking at the principle causes of unplanned downtime is the place to start and then deciding how best to address these.
Operator error and lack of skills will almost certainly be best solved with training and regular follow-ups to ensure proper understanding. This might be on the job, in conjunction with the OEM or other specialist in the equipment.
Obsolescence will mean it’s harder to source replacement parts or repair equipment as the OEM is unlikely to be providing ongoing support. Here a 3rd party with specialist knowledge and experience will need to be sought out.
For the main causes, ageing assets and mechanical failure, an appropriate maintenance strategy will be required and the options are discussed below.
Maintenance strategies for minimising unplanned downtime
Maintenance strategies vary and each type has their pros and cons. Whichever is chosen will reflect a mix of risk appetite, sophistication of on-site technology (e.g. IIoT – Industrial Internet of Things) and cost.
- Reactive Maintenance (Run-to-Failure): equipment is only repaired after breakdown. This has the obvious advantage of being simple to implement as well as having a low, upfront cost. However, the downsides are quite extreme with a high risk of costly downtime, reduced asset lifespan and potential safety issues.
- Preventative Maintenance (PM): scheduled inspections and servicing are used to prevent failures. An improvement over Reactive Maintenance as it helps reduce breakdowns and extend asset life, but can also lead to unnecessary work and consequent higher costs.
- Condition Based Monitoring (CBM): this tracks real-time equipment performance using sensors and diagnostics to identify early signs of wear. By acting only when parts begin to deteriorate, CBM reduces downtime and avoids unnecessary maintenance.
- Predictive Maintenance (PdM): as with CBM, Predictive Maintenance uses sensors to collect data analysing this to predict when failures might occur enabling preventative measures to be taken. This means the risk of unplanned downtime is greatly reduced, lowering costs and improving reliability. If there are downsides they are in the form of investment in new technology utilising IIoT (Industrial Internet of Things), connectivity and skilled staff.
Which one is best?
Each has its own pros and cons as mentioned above, although the riskiest is clearly Reactive Maintenance. However, both reports agree Predictive Maintenance is a significant development. Siemens noted that nearly half of global manufacturers have PdM teams, reducing unplanned downtime incidents by 41% since 2019. But the cost of unplanned downtime for the world’s biggest 500 companies in Siemen’s report is staggering, so perhaps it shouldn’t be surprising the most sophisticated maintenance strategy has been widely adopted by these.
The RS & IMechE report reveals more of a maturity gap. Only 29% of UK firms surveyed considered themselves highly mature with some still relying on Excel spreadsheets or paper records. Whilst 62% use a CMMS (Computerised Maintenance Management System), only 16% had embraced IIoT. This severely limits their ability to adopt Preventative Maintenance and also to some extent, Condition Based Monitoring.
Conclusion
The profiles of company and respondents of both reports differ. Siemen’s global analysis reflects the financial gravity of interruptions in billion-dollar operations. RS & IMechE on the other hand captures the practical struggles of UK firms balancing cost control, skills shortages and technology adoption. However, for both, the cost and implications of unplanned downtime can have severe repercussions.
As such the importance of actually having a maintenance strategy in place probably transcends which one is chosen (possibly with the exception of Reactive Maintenance). If Predictive Maintenance is currently the Gold Standard, adopting either the Silver or Bronze shouldn’t be dismissed; any strategy which minimises the cost and impact to businesses of unplanned downtime is clearly a huge, quantifiable benefit.