The real cost of unreliable equipment — it’s significant

Posted by Brought to you by Matthews Australasia on 10th March 2017

Not being able to count on your equipment to work when production is scheduled, makes it unreliable. And in the manufacturing industry, unreliable equipment has a bigger cost than just in dollars ­– it can affect workers, customer relationships and brand reputation.

So if you’re temped to slice something off your maintenance budget, or delay replacing failing equipment, it might be an idea to take a quick look at the total cost of unreliable equipment for your company. Number 8 is certainly not pretty.

There are eight main costs in unreliable equipment, and four simple ways to avoid unreliability.

First the costs:

  1. Downtime

Unreliable manufacturing equipment can lead to downtime, causing production to stop for an undetermined period – often without any warning. The true cost of a machine breakdown has been estimated as between four to 15 times the maintenance costs. Because for every second production is down, the company is losing money, you might miss deadlines, impacting the rest of the supply chain, and risking penalties and even customers.

  1. Excess maintenance

If your equipment isn’t in good working order, it will inevitably require more maintenance than reliable equipment. For example, labellers might need print-heads to be changed more often. These costs can quickly add up in terms of materials and labour, as it takes workers from value-adding tasks. The result is lost profits.

  1. Lost production

The value of lost production is the income you could have made if the equipment hadn’t failed and production hadn’t been interrupted. Depending on how long your equipment is down for, this can mount up to thousands of dollars. (Here’s some more info on harnessing the power of metrics.)

  1. Equipment repair

Unless you’re a firey, “putting out fires” shouldn’t be the preferred way to run your business. Fixing equipment means key staff or technicians are forced to stop what they are doing and manage the crisis. You need to order supplies, spare parts, tools and trained labourers … leading to unpredictable downtimes. This means the total cost of repairing an equipment breakdown is three to five times the cost of the same repair when performed in a planned manner (in order to prevent failure). This blog on what you need to know about preventive maintenance vs breakdown repair goes into more detail, and here’s some more information on PMPs, or planned maintenance programs.

  1. Equipment replacement

With unreliable equipment, you need to consider the likelihood that you will need to replace it when you least expect it. Equipment-replacement costs far exceed the total costs of routine maintenance, and you may not have budgeted for any equipment replacements in this financial year, meaning the money needs to come from other areas of the business. And that’s never good…

  1. Sacrifice of quality

Notwithstanding downtime where no products are being manufactured at all, consider the cost associated with sub-quality products coming off the line when the equipment was failing. This could be labels with barcodes that don’t scan, illegible product codes and information, checkweighers that let packaging pass through with too much or too little inside, and so on. Poor quality goods can quickly erode customer and consumer trust in your products and brand, not to mention put you at risk of penalties and costly recalls. Then there’s the added cost of reworking or repackaging products to meet orders.

  1. Safety risks

Unreliable equipment places your consumers and your staff in danger. Inspection equipment that’s failing may let contaminants pass through undetected, putting consumers at risk. But unreliable equipment may also put staff at risk, especially in a high-pressure, breakdown situation. The rule is simple: a reliable plant is a safe plant. Safety is paramount for everyone.

  1. Lost business

Over time, poor quality products and missed deadlines can lead to one very significant cost for your company: lost business. In addition to industry association regulations, today’s retailers have increasingly strict rules around the products they put on their shelves. How can you meet these demands using equipment you can’t rely on?

HOW TO AVOID UNRELIABILITY

 And now, here are four simple ways to avoid equipment unreliability.

  1. Preventive maintenance

Preventative or planned routine maintenance is non-negotiable. The main aim is to maximise your equipment’s performance by keeping it running safely for as long as possible, without unplanned and costly failures. This involves basic maintenance tasks that can be performed by operators, as well as routine inspections, services and tests by the equipment provider.

Preventative maintenance also detects whether equipment is about to fail so you can schedule corrective maintenance repairs in time. Matthews provides preventative maintenance services to help you get the most from your coding, labelling and inspection equipment. This blog on the importance of TPM (total productive maintenance) to Australian manufacturers gives some more insight.

  1. Operator training

This is also critical. There are certain tasks your staff can do to ensure your equipment runs to its best, however, this requires the right training so staff know how to conduct the maintenance properly. For example, there might be multiple steps involved or you might have new staff members who have never performed maintenance before. Providers such as Matthews can help with ongoing training for your staff.

  1. Spare parts

Do consider what spare parts you need access to. Many breakdowns require a part or module replacement; so ensure you work with an equipment provider with local access to adequate spare parts or even a spare machine. (Here’s a bit more on choosing a provider.) 

  1. Upgrade?

Finally, evaluate if you need to upgrade the equipment. If the cost of maintenance is high, consider a swap to newer, better technology. There are trade-out deals and rental or lease options that you can take advantage of.

 

Don’t risk the costs of unreliable equipment. Talk to us today.

A great option for small business to keep product ID and inspection equipment current is leasing.

 Check out Matthews’ great resource library. It has a host of detailed information that’s all free to download! There are whitepapers, presentations we’ve done to industry bodies, infographics for manufacturing, case studies, articles from our thought leaders, vids showing solutions in action and more!