What would your company or department do with an extra $22,000? What would you do with $22,000 per minute for an hour ($1.3 million)? A day ($10+ MM)? A year (do the math)?
Companies are always looking for ways to keep costs down, devising clever techniques and sometimes paying consultants to show them a way to trim a few bucks from the op ex and squeeze out a bit more margin. One of the simplest things they can do? Simply keep things moving.
The auto industry may have the most expensive downtime. On average, every down minute costs an auto manufacturer $22,000. That’s the average – some companies calculated their downtime losses at $50,000 per minute. Auto makers are at the high end of the scale, but an hour of downtime costs the average company $260,000.
What’s even more grim than what we do know is what we don’t know. 80% of companies don’t have a good read on how much downtime they have each year, which means they don’t know how much it costs them. They’re losing money without even knowing it: they think their operating expenses are what they are, not knowing why they are that way and how much lower they could be. Across industries, the best estimates are losses of 5-20% productivity from 800 hours of downtime each year.
Even if companies can’t put their finger on their downtime, they can take a close look at some common culprits. Human error and faulty equipment bring plants to a halt more than any other factors.
A careful review of incidents, quality controls and workplace practices can reveal some of the recurring deficiencies that might be behind a pattern of human errors at a given company. Proactive, preventive maintenance and testing can also alert workers and supervisors to potential problems with equipment. Staying on top of the preventive maintenance schedule and not waiting for a component to fail before replacing it (most come with a rated lifespan for a reason) could be easy, inexpensive ways to reduce these phantom downtime losses.
Power transmission is an $80 billion market in North America. If the average company is leaking 5-20% of productivity each year, we’re talking a multibillion dollar ripple effect across the industry and the economy. Those millions or hundreds of thousands that each individual company is missing out on could go towards capital improvements, expanding into new markets, launching a new product line or innovation division, or hiring new workers. It’s lost opportunity, as well as money, up and down the supply chain.
Anything companies can do to decrease their downtime will give them a competitive edge. The whole point of power transmission parts is to keep industry moving. Easier said than done, but easier on the balance sheet than another hour of lost productivity.