Modern warehouses and distribution centers rely heavily on their electrical equipment. This machinery helps move products from the shelf to the shipping area. The more efficiently that movement happens, the lower your costs are, and the better your bottom line. But when that electrical equipment fails, that unscheduled downtime can translate into significant losses for your company. According to The Manufacturer, 46% of unplanned downtime is due to hardware failure and malfunction. That means the operational integrity of your electrical equipment plays a significant role in both the productivity and profitability of your warehouse.
The real costs of unscheduled downtime are both direct and indirect. Along with the expenses, there can be long-term repercussions for your business that can impact you for months or even years. That includes shaken customer trust and a surge of opportunities for your competitors, both of which take a considerable amount of effort to overcome. And it’s all caused by something as small as a stopped conveyor system.
So how much money is your business losing to unscheduled downtime? And how can you help prevent it from happening? Let’s break it down.
These costs are directly associated with faulty electrical equipment. You can usually tie these expenses to a specific episode of downtime, and they’ll have an immediate impact on your bottom line.
Indirect costs tend to be more long term in nature. They may not be directly tied to an incident of unscheduled downtime but can have an impact on your business’ future.
The expenses are adding up when equipment is down. But what are the real monetary impacts on your bottom line when your warehouse is at a standstill? It’s going to be different for every business, based on operational expenses and productivity rates. But it’s going to happen. One survey found that organizations experienced an average of two periods of unscheduled downtime over the past three years. Aberdeen’s study on Asset Performance Management found that the average cost of unplanned downtime was anywhere from $10,000 to $250,000 per hour. Those costs are on the rise too, meaning decreasing downtime year over year is fundamental to the success of a business.
So how much time is your business losing to unscheduled downtime? Turns out, most companies don’t know. More than 70% of companies fail to track their as a metric. The International Society of Automation estimates that most manufacturing businesses lose about 5% of their productivity when production lines are slowed or halted, while others may be losing as much as 20%. If you are one of those warehouses failing to track these incidents, there is a good chance you are underestimating your losses. Tracking this downtime can lead to a clearer understanding of the problem, while also providing some cues to possible solutions.
There are two primary ways of avoiding electrical equipment failure on your warehouse floor: investing in quality equipment and giving it the right preventative maintenance.
A small price tag may lure some warehouse managers into buying discount electrical equipment for their distribution center. While the upfront costs may be appealing, the long term cost of low-quality equipment can be devastating. Investing in quality conveyor systems, solenoids, and pallet systems can be an expense that pays for itself. Not only will the equipment last longer, but the decrease in unscheduled downtime can lead to far greater productivity within the warehouse itself.
Secondly, and perhaps even more importantly, is the issue of preventative maintenance. Making sure you clean and maintain your equipment regularly will go a long way to ensuring it stays up and running. Make sure you keep a schedule of when significant equipment is due for maintenance and replacement, so nothing falls through the cracks. Analyzing downtime and maintenance schedules can help you build predictive maintenance plans too, that way you can anticipate potential breakdowns and work to prevent them before they happen.
While calculating the costs of unscheduled downtime can be difficult, it’s an undeniable necessity for your warehouse. That data can help you increase your bottom line in a big way. Knowing how severely your warehouse is impacted by faulty electrical equipment will be the first step in keeping those expenses down. Looking for better electrical equipment to power your warehouse? From motors to solenoids, talk to our team to learn more about how we’re helping distribution centers like yours keep their systems running.