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Optimize Operations While Managing Downtime Risk

by FORTNA Thought Leader

One universal truth in the material handling world is that downtime is undesirable and to be avoided at all costs. However, downtime does happen to even the most careful of operations, in fact, a recent BusinessWire1 study identified that more than 82% of companies had experienced at least one unplanned downtime incident over the past three years.

Aberdeen strategy and research2 found that across all industries, the average cost of one hour of downtime was $260,000. With such a high cost to an organization when these events strike, a proactive approach to identify and remediate the root cause of the issue before it halts operations can control risk and protect the bottom line.

The System Health Check

With rising inflation and the daily pressures of supply chain disruptions, self-inflicted downtime can put a drag on productivity, labor, and cost control. In the earlier BusinessWire report, it showed that 70% of companies were lacking full awareness of when equipment is due for maintenance, upgrade, or replacement. While many executives monitor KPIs related to throughput, cost per order and overall operational efficiency, there seems to be a gap of awareness in maintenance programs, aging material handling equipment, and critical parts. Most warehouse managers are concerned with getting orders out the door on time and with the right carrier while satisfying customer expectations. Managing aging equipment or being sure that the needed maintenance is occurring might not be high on their priority list until a downtime event happens.

Another advantage of a system health check is that it can uncover opportunities for improvement and optimization, identify gaps in productivity, processes and increase the utilization of automation devices and equipment. The following is the list of the recommended systems and processes that should be reviewed with a scheduled cadence:

  • Mechanical Equipment – All material handling equipment, function, and condition
  • Electrical Systems – Connections, consumption, and safety
  • Safety Procedures – Safety conditions, concerns, and issues
  • Controls and Software – Cyber security issues and software viability and updates
  • Maintenance Program – Review maintenance program for improvement
  • Critical Parts List – Create and supply customer with critical spare parts lists to have in stock

The System Health Check Executive Report

A system health check executive review and report should be produced with all findings, suggestions for immediate attention and opportunities for optimization and improvement. The detailed report should also highlight a complete replacement parts list with a list of critical spares required for those elements that have a high wear rate, short life span of use or is critical to system operations.

Avoiding Downtime

A proactive approach is the most effective strategy to avoid costly downtime as it will call out and address issues before they break down operations. A system health check, especially before peak time, can identify potential downtime issues as well as recommend and implement solutions to address issues before they become a downtime event.

Calculating Your Downtime Costs

Know how much a single hour of downtime costs your organization? Use the formula below to calculate.

Downtime Cost (per hour) = Lost Revenue + Lost Productivity + Recovery Costs + Intangible Costs
  • Lost Revenue – What is the hourly revenue you generally produce when your system is up and running?
  • Lost Productivity – What is the cost of your labor that is now not active? This cost is the hourly rate multiplied by the number of people affected by downtime; it may not just be workers, it can be other staff members now pulled from their duties to work on the downtime issue.
  • Recovery Costs – What is the cost to recover your revenue? Overtime and expedited shipping costs, as well as repair and part costs.
  • Intangible Costs – While this cost might not have a hard number, downtime can have a direct effect on a company’s reputation with both consumers and vendors. In fact, many vendors have penalties associated with late and missing shipments.

 

FORTNA Can Help

The FORTNA System Health Check team of experts will help identify the root cause of potential downtime before it occurs and recommend and implement solutions to keep the system healthy and operating at an optimal level. Identifying typical and proactive part replacements and optimizing the system to assure maximum uptime, productivity, and ROI.
Visit fortna.com to schedule your FORTNA System Health Check today.

 

1 https://www.businesswire.com/news/home/20171106006370/en/Human-Error-is-More-Common-Cause-of-Unplanned-Downtime-in-Manufacturing-Than-Any-Other-Sector-According-to-New-Research
2 https://www.aberdeen.com/blogposts/stat-of-the-week-the-rising-cost-of-downtime/