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Maintenance Management Resources
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True Cost of downtime
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Cost Examples Add to favorites

All you have to do is participate in the survey, and you will recieve reports as data has significant changes.

TDC - Real Examples of Downtime Cost

Here are some real examples found on the internet and  testimonials given to us, of increased 'bottom line' savings, and increased production by reducing downtime. Do you have a story? Please click here to share it with us.

Pulp Mills Save $3.5 million to $6.5 million

GUELPH, Ontario, Sept. 5, 2000 (Press Release) - Rowan Williams Davies & Irwin (RWDI) announced today that the firm has successfully assisted pulp mills to achieve significant improvements in their chemical recovery boiler performance.

A range of $3.5 million to $6.5 million in savings due to reduction in unscheduled chemical recovery boiler shutdowns has been reported.

The productivity gains reported by the first six mills that used the unique technology totaled more than 130,000 tonnes of pulp per year. No capital costs were necessary for 5 to 20 percent increased chemical recovery boiler capacity. The frequency of water washing was reduced from as many as 8 to 16 times a year to only one to three times a year. Dramatic reductions in odorous TRS emissions, corrosion and soot blowing steam occurred while increases in thermal efficiency were noted. (source)


Emerson Process Management unveils e-fficiency® service

The adoption of e-fficiency has been impressive - its quick, cost-effective deployment has allowed customers to make significant savings in the range of $1 million to $8 million per year by making informed decisions on poorly operating equipment." (source)


The Cost of Ignorance by Robert Schultz

The average skilled tradesman changes jobs about every 3 ½ years. But according to the U.S. Department of Labor, it costs a company one-third of a new hire’s annual salary to replace him or her. Using the average annual labor cost of $50,000.00 that Preston Ingalls shared years ago, this amounts to about $16,500.00 lost. Even if your company only has about 15 maintenance people that is almost $250,000.00. This can equate to $5,000,000.00 in shipped sales, where you did all the work but you won’t see a dime of profit. (source)


August 1998 Field Report: SPM Instrument, Inc.

As an example, Peplow recalls the case where a customer had an exhaust blower assembly that was functioning so poorly that its life expectancy was barely between 4 to 6 weeks, causing numerous production bottlenecks. "The worst part was that they never knew when it was going to quit on them," explains Peplow. Downtime was typically 6 to 8 hrs. because of secondary shaft damage, and downtime costs reached to $3,000 to $4,000 per hour.


Business Industrial Network Survey (case 547)

Below is from session on 4-20-00, with a maintenance manager in a large envelope factory. As you can see, he confirms the big dollars lost in down time. He also touches on the profitability of providing parts locating.

Summary:

Entire printing plant down = $150,000              hour = $6,250

Per Machine down                                              hour = $3,000

Parts cost                                                           from $10- $7,500+

Shipping of parts                                                from $20 - $700+

Time to wait for repair part                 From 3hr - 3 days


VersaCall Communication Data Collection and Reporting System

As a result of using the VT400, Automotive Manufacturer Production identified that it could produce one additional car with the VT400 System per 24-hour production period. The cost savings realized during each 24-hour period was $480.00. This savings came from the increased efficiency of utilizing the fixed factory overhead cost. Scrap and re-work cost was not considered. A savings of $480.00 per day results in a savings of $2,400 per 5-day week.

In another factory the VT400 system was installed to satisfy the need for improved communication between production workers and support personnel. Wireless Call Boxes were strategically placed along the line to enable production personnel to request assistance without leaving their work stations. After analyzing actual data collected and reported by the VT400 system, plant management realized that the line was producing one additional assembly per week due to reduced downtime. The inventory value of each assembly is $4,200.00. In one 4-week period, the plant was able to realize an additional $16,800 in production output. (source)


Business Industrial Network Survey (case 228)

I am production foreman at a plant that produces sodium phosphate. Plant startup takes 24-48 hrs, and shutdown at the end of a production run takes 12. Out of a ten-day run, that means that one twelve-hour shift for downtime because of a breakdown can cost us as much as 48 hours, depending on how much sodium sulfate is lost when the system crashes.

Let's see, ten twenty four hour days per run. Less perhaps 48 hours startup/shutdown, less twelve hours to fix a pump or conveyer, less perhaps 24 hours to get back into production. That doesn't leave very much does it?

Unfortunately, the plant was built in the '60s, and a lot of the equipment is around that age. Instead of buying new stuff, the parent company, when they reopened the plant, re-cycled as much as they could. If you want a REAL good example of the cumulative cost of breakdowns, try this. The company has spent about 4.7 million on trying to get the plant running, over the past four years.


Northeast Premium Efficiency Motor Initiative

approximately 70 to 75 percent of the electricity consumed by industry is used to run motors.

about 80 percent of installed motors are 25 horsepower or less. A premium efficiency 25-hp, 1800-rpm, TEFC 460-volt motor operating 16 hours per day at 75% load will save $600 per year over a standard motor. Even without a rebate the payback is less than eight months

A typical 100 HP motor at full load, continuous operation, costs over $70,000 per year to operate. Using a premium efficiency motor will save you about $1400 each and every year.* ($0.10 per kWhr)

Rewinding may not pay. Efficiency can be reduced by 1% to 2% or more. Always calculate the operating costs based on nameplate efficiency before you make the decision to replace or rebuild. (annual operating cost = (HP x .746 kW per HP x hrs per year x $ per kWh) /motor eff)  (source)


Life cycle costs estimated

Approximately 18% of a facility's operating cost can be attributed to its control system and associated maintenance.

Recent surveys have also indicated that 80% of requested maintenance is unnecessary, and, if a problem occurs, only one-third of the time assigned to the repair is actually spent on the repair. The remaining two thirds of the maintenance time is spent in diagnosis. (source)


Business Industrial Network's "Quick Help" reduce time spent in diagnosis.


The Smart Instrument's New Frontier

DuPont pegged maintenance as "the single largest controllable cost opportunity, representing $100-$300 million per year corporate wide."
    Plant maintenance is indeed big business. Worldwide costs are estimated at $69 billion annually, compared to the $23 billion spent on process instrumentation and controls. Other research puts maintenance expenditures at 9-30% of the total costs of goods sold at a typical process plant, and 4-8% per year of the replacement value of the process plant itself. (source)


MDI Case History #1

Problem Detected: Bearing defects on the pinion gear shaft.
Description Of The Situation: The drive end pinion bearing was found to have outer and inner race defects during a vibration survey. This machine experienced a pinion gear failure 30 days prior. The pinion gear failure was found to be caused by an improper start-up of the mill while the inching drive was engaged. This caused teeth to be broken from the gear. The facility replaced the pinion gear with the only spare gear available (the spare was actually a worn gear taken out of service over a year prior). The situation at the time the bearing defects were detected, left the facility with no spare pinion gear. If this bearing had been allowed to fail catastrophically, the pinion gear could be ruined. Lead time on a new gear manufacture was 6 weeks at premium expense. Early detection allowed the bearings to be replaced to avoid major downtime due to a gear crash and premium cost of repair. (source)

Cost:

Cost to repair at scheduled maintenance $25,928.00

Cost to repair at complete failure $86,875.00

Production loss at scheduled maintenance $59,400.00

Production loss at complete failure $3,438,600.00

Total Cost Of Avoidance: $3,440,600.00


 Donald G. Reinertsen (professor at Cal Tech.) speaking in Chicago

He said that such delays or costs associated with engineering prototypes is written off or expensed at the time, complying with generally accepted accounting principles. He went on to explain that in his research he has found that the average cost of delay (downtime) in the manufacturing industry is 10 to 1. With some lesser managed company's recording numbers as high as 100 to 1.


"Doing something is much better than doing nothing at all"

Preventative maintenance aggressively seeks deficiencies in an electrical system," says Bremer. "An electrical panel that serves a portion of a building which supplies computer could cost a company $30,000 per hour if it went down. A complete electrical preventative maintenance program on this panel, including testing, cleaning and tightening, typically costs less than $150. (source)


Facilitation Case Histories (by Reliability Center, Inc.)

Please visit their page to see the following examples of how forming Root Cause analysis teams saved money and how much. (source)

World's 8th Largest Steelmaker - $1,150,000 material cost reduction (1995 versus 1997)

Estimated Cost to Conduct RCA: $30,000
Estimated Returns from RCA: $1,150,000
Return on Investment: ~4000%

Manufactured Fine Chemicals - Conservative estimates report the damaged blend tube held enough green pellets to contaminate five (5) more railcars of clear product.
(5 Railcars) x (190,000 lbs/Railcar) x ($0.09/lb) = $85,500US

Estimated Cost to Conduct RCA: $2,700
Estimated Returns from RCA: $85,500
Return on Investment: ~3200%

One of the Largest Refiners in the United States -Estimated Savings of $7,150,000 ($6,500,000 in Production Losses and Maintenance Labor and Material Costs of $655,0000)

Estimated Cost to Conduct RCA: $40,000
Estimated Returns from RCA: $7,150,000
Return on Investment: ~17,900%

(source)


See also: Comparing Maintenance Costs

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