Unplanned Downtime – The Costs and How You Can Reduce It
Unplanned downtime is a stressor looming over every company that relies on functioning equipment to get work done. We never know when something might break, wear out, or otherwise fail at an inopportune, unscheduled moment, shutting down production, throwing goals and order fulfillment into disarray, and often necessitating overtime and emergency work to get back online.
That unplanned downtime seems like a terrible spectre hovering with no real way of knowing when or how it will hit. Yet, in fact, there are ways to reduce unplanned downtime, and reduce the costs that come along with it. Because, if there’s one thing we all know, it’s that unplanned downtime is expensive — no wonder it’s something we all work hard to mitigate!
If you’re not concerned about unplanned downtime, or are unsure of exactly how it can impact your organization, we can show you the financial costs associated with this scenario so you can weigh how important it is for your business to avoid outages. And, with those costs in mind, we’ll show you how you can reduce downtime and thus reduce its financial impact.
Calculating the Costs of Unplanned Downtime
The true cost of unplanned downtime depends on variables like the size of your company, the complexity of your systems and the length of the outage. However, there are factors that influence the overall cost, that you can look at and individualize to your situation to get a good estimate. Here’s what to consider in your own calculations.
The most obvious impact of unplanned downtime is lost production. If you know what you can typically produce or manufacture within a given time period, and what those items are worth, you can then calculate the direct costs of lost production from unplanned downtime. And, even when you get back online, any depleted inventory as the result of lost downtime will also contribute to overall costs as you try to catch up.
You will also have to add in personnel costs. Even if there is no work to be done thanks to unplanned downtime, you have staff that need to be paid. You’re paying people whether or not you’re making money off of production. Add to that any costs of bringing other staff on board to deal with outages, whether they are working to repair the equipment, or are shoring up the customer service department as your clients become frustrated with lack of output.
There are indirect costs to unplanned downtime that are a bit more challenging to calculate, but still important. Your equipment and staff will experience stress and possibly even burnout as they work to catch up from an unplanned outage, which can lead to poor decisions that lose even more money or productivity. It also takes away time your organization could be spending innovating new products and ideas, expanding your customer base, or otherwise improving profitability.
Together, these factors in unplanned downtime can cost a lot. A survey from ITIC found that 98 percent of surveyed organizations say a single hour of downtime costs over $100,000, with 81 percent indicating it costs over $300,000. One-third of surveyed businesses report that one hour of downtime costs $1 million to over $5 million. As ITIC says, the only good downtime is no downtime. Knowing how to reduce your unforeseen downtime risk is key to keeping costs low.
Reducing the Risk and Costs of Unplanned Downtime
When you reduce the risk of unplanned downtime, you are automatically reducing the potential cost. Often this risk reduction does take a slight investment upfront, but compared to the overall costs of downtime, planning ahead is much more affordable and predictable.
You should know where your downtime risks lie, through auditing current equipment and procedures. As an example, in various industries relying on industrial and mechanical equipment, something as simple as a cheap valve failing is enough to take everything offline.
An audit will reveal that issue, leaving your organization with a choice — invest in replacing or repairing that valve over and over again, eating the cost of any planned or unplanned downtime that goes alongside. Or, you can reduce the risk and cost of unplanned downtime by spending more upfront on a valve that will last.
When you invest in an Everlasting Valve product, you’re getting a rotating disc valve that actually gets better over time, improving efficiency and productivity instead of inching ever closer to downtime. That’s because our specialty valves feature a unique open-body design and self-lapping rotating disc that clears out the valve and tightens the seal every time it is used. With our products in service, your equipment keeps going through even the toughest situations.
You can rely on Everlasting Valves to help reduce the risk, and the costs of unplanned downtime. Get in touch with us to learn more.