Downtime, especially in the manufacturing and distribution industries, is extremely expensive. According to studies, one hour of downtime at Ebay costs $225,000! Amazon has valued their downtime upwards of $180,000 per hour.  If you run a smaller business, cut Amazon’s downtime valuation by 99.5% and you still end up losing over $20,000 in just 24 hours! Since it’s something you definitely want to avoid, let’s talk a little bit about the ways downtime affects your business and bottom line and how to minimize the impact.

How does downtime affect your business?

• You lose money on your employees. When your workers can’t work, you’re losing money.

• You lose money on product. Think about how much your product costs and how long it takes to manufacture. If you do the math, you can figure out exactly how much a minute is worth to you. Now multiply that by the amount of downtime you had, and you’ll know just how much the downtime can cost you.

• Fixed costs keep running. Factor in the electric bill, the water, insurance and everything else needed to run operations...Ouch.  If you’re in a distribution center environment, think about order fulfillment, if you are down, your customers won’t be receiving their orders, which can have adverse short-term and long-term effects.  Also, add in the overtime costs to catch up when your forklifts are back up....Double ouch.

• Everyone gets stressed. When you can see money flying out the door with every tick of the clock, things get stressful. Downtime stresses you and your employees out and makes your environment tense.  That’s when mistakes commonly happen.

• Your reputation is hurt. Customers don’t want to wait on product because something in your supply chain operation has gone wrong. In fact, they just won’t. When your business faces downtime, studies show you also face depleting stock returns and shareholder wealth.

How can you avoid it?

• Think about long-term cost vs. immediate cost. Sometimes it’s hard to pay more for a part or piece of equipment when there’s a less expensive option available. However, that less expensive option is usually less expensive for a reason.

• Service your equipment appropriately. Servicing your industrial equipment properly is extremely important. Make sure you’re following recommendations for how often and in what manner you should service your industrial equipment.

• Train your operators. Accidents and improper use are less likely if your operator has been trained. Accidents and improper use cause downtime that could very easily be avoided.

Taking steps to increase uptime can cost a bit of time and money upfront, but it won’t cost nearly as much time and money as downtime.