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How Much Downtime Can Cost Your Business

“Time is money,” or so the adage goes; but how easy is that to quantify? Well, for many businesses, this is a simple equation to work out. Whether you go by operational and repair costs, salaries, or products, knowing how much you spend to stay productive can help you understand how much money you’re losing when the plant has to be shut down for repairs or a piece of equipment slows down.

Unplanned downtime is one of the biggest detriments a business or company can face. It means they’re not producing, and that implies a potential pause in sales and money coming in. Worst-case scenarios will see a company actually hemorrhage money during downtime, so maintaining your uptime is of absolute importance.

How to calculate the average cost of downtime for a business

Monetary losses owed to downtime will vary across industry and according to your revenue, duration of the downtime, how many people are affected by it, and time of day/year. Therefore, depending on when you experience downtime, the losses will fluctuate. Fortunately, most operations can withstand at least a percentage of downtime before they experience any significant losses. The trouble is determining what that percentage is. To find it, you’ll need to calculate the following:

  • Cost of downtime per hour
  • Recovery time objective (RTO)

Although the above are most closely associated with disaster recovery or data protection plans, the same principals can be applied to plants and other operations.

To find your cost per hour of downtime, you’ll add labor costs per hour to the revenue lost per hour. Factors to include:

  • Your revenue
  • Number of employees
  • Number of hours worked (per week)
  • Percentage of your workforce/operation downtime will affect
  • Any annual employee benefits

Your recovery time objective, or RTO, is a metric that measures how long it takes you to repair your equipment or address the cause of your downtime. Some plants may be able to carry on without a particular piece of equipment for days; but others may depend on that machine for daily production, so they may have less recovery time before losses occur. By calculating and understanding your RTO, you can operate more effectively despite downtime. This is because you’ll establish a hard number of hours, days, or weeks that your operation can survive a drop or stop in production, before incurring any losses or risks.

What downtime looks like for material handling equipment and operations

Downtime doesn’t just affect your bottom line; it can also have a negative impact on customer satisfaction. Downtime can be due to lack of operator experience, improper maintenance, or everyday issues such as product jams or different product mixes. The main thing to remember are the following indicators of poor material handling equipment effectiveness:

  1. Reduced customer satisfaction
  2. Lost productivity
  3. Labor considerations

These costly indicators can have far-reaching effects on your business, so it’s important to know how costly downtime can be to properly avoid it.

A common issue with many big operations and plants is equipment and software obsolescence—outdated software or machines that simply can’t maintain your standards of quality and production. You can mitigate this through preventative maintenance and inspections, and by making regular updates to any servers, controls, hardware, or platforms that you rely on. By keeping these elements of the operation in mind and current, you can reduce the likelihood of stoppage caused by outdated components.

Understanding your operation’s capacity to withstand periods of sudden downtime is crucial to your overall business model and profits. If your plant shuts down for an hour due to repairs, how will that affect the rest of your operation? Determining how long you can last before incurring losses is key to not only getting through downtime intact, but it will also give you a timeframe you can work within. Being able to take effective and immediate action at the start of an outage is what separates efficient operations from those less so.

If you’re looking for a way to minimize the impact downtime has on your business, contact Kemper for custom solutions, including preventative maintenance plans under our ROCKSTAR Program. We’ll help you protect your operation from the costly perils of downtime so you can continue being profitable and productive.

Kemper factory and MSHA trained technicians will provide you with equipment maintenance and inspections for all of your crushers, screens, conveyors and wash equipment.  We will check fluid levels, monitor per manufacturer guidelines and recommend a maintenance schedule so your operators know how and when to take care of your plant equipment.  Our service team can replace or repair OR train your operators to do the work themselves.  Plus, Kemper ROCKSTAR service can recommend what parts you need to order or have on hand to minimize your downtime when changing out wear parts.

Let Kemper Equipment use our company values of knowledge, innovation, safety and commitment to help you achieve remarkable results.  Contact service@kemperequipment.com for more information today.