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  • David Peterson

The Art of Losing Money While Equipment is Broken

Updated: Dec 21, 2019

Memoirs of a Frustrated Production Manager


It’s early on a nice morning; ready for work, you hop in the car and it doesn’t start.

Engine turns, but no start.


Suddenly, the nice day is ruined, but the cost is far more than just the broken part itself.


The car will be out of commission, requiring you to use another family car that day, maybe several days.


You’ll need to swing by after work and spend time with the mechanic or parts store clerk to locate and purchase the part.


Hopefully, you get the correct part the first time.


Oh, and not to mention you’ll be thinking about the problem the WHOLE day when your mind should be devoted to other tasks.



Believe me, I’ve been there. Actually, I’ve been there a lot of times. Maybe I need better cars.


It would be nice to think that the malfunctioning equipment on the manufacturing floor don’t affect your home life as much as your broken-down car, but the reality is that it can affect you personally in some pretty big ways.


Let me break down the actual costs that you experience during these equipment downtimes.


There are 3 main sources of loss that bite you whenever a part fails in a piece of equipment.


#1: The LOSS of YOUR MONEY


First, the obvious loss of money from the downtime.


This is the big, tangible one.


The formula is pretty simple: the number of items produced by that machine per hour multiplied by the profit per item, and that’s the loss per hour.


For example, if that machine can make 1000 items per hour and the profit per item sold is $20, then you are losing $20,000 per hour.


That sounds bad, but in reality, it gets much worse.


In a survey from 2005 (note, that’s nearly 15 years ago now, the current price would exceed this data), the automotive industry from companies ranging from $10 million/year to $5 billion/year reported average losses of $22,000 per MINUTE.


Yikes.


That means that although some may lose less or more, that cost is still staggering.


At that average, if it takes a technician 15 minutes longer to repair the machine because of a skill deficiency, you lost $330,000 dollars.


You could have trained or hired the right people a long time ago for that cost, but it doesn’t matter now.

The money is gone.


#2: The LOSS of customers and their trust


Customers aren’t rude, they simply want what they were promised.


If an online retailer promises free overnight shipping, but the item doesn’t arrive until a week later, you probably won’t shop there again.


If another manufacturer relies on your products to operate, your downtime suddenly becomes their downtime.


They may not want to look elsewhere, but it’s critical now - they HAVE to look elsewhere.


This can hurt your revenue far beyond just the monetary cost of the downtime.


You’ll need to win those customers back, and that can be a challenge with a broken trust relationship. You might need to go find new customers and gain their initial trust.




Your reputation can be a hard thing to fix.


#3: The LOSS from taking your losses home...


Leaving work and going home to your family can be really rewarding.


I love my job, but still, the highlight of my day is getting to see my wife and kids.

And I love it when I don’t bring work anxiety home with me.


Work issues are like a car that doesn’t start. It eats away at your mind.


You can’t help but pull your phone out to look up DIY forums, browse through the catalog of various starters, batteries, or whatever the problem might be.

It sucks the fun out of coming home. If you can’t enjoy home life, and your family doesn’t get to enjoy you, why not just stay at work?


To me, that’s worse than losing thousands of dollars.


I want to be able to listen to my boys telling me about their day at school.


I want to be able to hear my baby girl’s new words she’s learning.


I. Don’t. Want. Anxiety. To. Come. Home. With. Me.


Clear enough?


I bet you’ve been there, and I bet you completely understand this.


What can you do about it?


Losses at any company are unavoidable, but they can be minimized.


You need to stay ahead of those costly problems.


Fortunately, this isn’t a difficult task - the path to a solution is easy to conceptualize, all it takes is the proper implementation!


One of the best ways to ensure quick, reliable maintenance is to get the RIGHT training.


Don’t look for training that ‘sort of’ teaches what you want.


Don’t find a class with a few bullet points on a website that looks similar to the tech in your facility.


You should never have to settle for anything less than the best.


Find people willing to train your technicians the right way.


Find instructors willing to visit your facility, and get to know you before prescribing the right courses and content.


This is our goal.


We’d love to help.


Contact us today and save the losses to your revenue, reputation and relaxing time at home.


https://news.thomasnet.com/companystory/downtime-costs-auto-industry-22k-minute-survey-481017

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