Asset downtime is the period when equipment or systems are out of service—plays a critical role in asset and inventory management, especially for businesses in manufacturing.
Understanding how to manage downtime is essential to address these challenges effectively and maintain smooth operations.
This article explores the types of downtime, its causes, impacts, and practical strategies to reduce downtime risk.
What is Asset Downtime?
Asset downtime refers to the period when equipment, machinery, or other critical assets are not operational, preventing normal production or operations. This can happen due to either planned maintenance (e.g., routine servicing) or unplanned events (e.g., sudden equipment failure).
For example, in a printing company, downtime occurs when a printing press stops working because of a malfunction in the ink system or during scheduled maintenance to replace worn-out parts.
Planned Downtime
Planned downtime refers to scheduled or anticipated periods when assets are intentionally taken out of service for maintenance, repairs, upgrades, or improvements. This type of downtime is proactively managed and typically occurs during off-peak hours to minimize operational disruption.
Planned downtime allows businesses to keep machinery in good working order, reducing the likelihood of unexpected breakdowns. Since it’s scheduled, it provides the flexibility to minimize its impact on production by choosing times when operations are less demanding.
Unplanned Downtime
Unplanned downtime happens when assets unexpectedly fail or become inoperable, leading to sudden disruptions in operations. This type of downtime is often caused by unforeseen issues, and businesses have little control over when or how it will occur.
Unplanned downtime typically leads to reactive repairs and often results in higher costs due to emergency fixes or expedited services.
Also Read: Asset Depreciation: Its Impact and Strategies to Manage
Causes of Asset Downtime
Equipment Failures
Aging machinery or lack of regular maintenance can cause equipment to break down unexpectedly. For example, a worn-out part can fail without warning.
Without proper tracking and maintenance schedules, failures are more likely. Poor asset management can delay repairs and result in using outdated equipment, increasing the chance of breakdowns.
Related Article: Asset Maintenance: Importance, Challenges, Common Mistakes
Human Error
Mistakes in operating or setting up equipment, such as incorrect handling, can cause breakdowns.
Lack of proper training or unclear guidelines increases the risk of human error, especially when working with poorly maintained or outdated equipment.
External Factors
Power outages, natural disasters, or extreme weather can unexpectedly stop operations.
Without backup plans or preventive measures, these external factors can have a bigger impact, leading to more downtime.
Proper asset management helps prevent these causes by ensuring regular maintenance, better inventory tracking, proper training, and effective contingency planning.
Impact and Risk of Asset Downtime
Financial Impact
Downtime leads to lost production, missed deadlines, and higher labor costs for repairs, which can result in significant financial losses.
Operational Impact
When assets are down, workflows are disrupted, causing delays that can affect other parts of the manufacturing process and create a ripple effect throughout operations.
Risk of Prolonged Downtime
Extended downtime can damage customer trust and reduce a company’s competitiveness in the market, as delays may lead to unfulfilled orders and a poor reputation.
Overall, unplanned downtime is costly and can hurt both short-term operations and long-term business relationships.
Simplified Method to Calculate Downtime Costs
To manage downtime effectively, you first need to understand its cost. Here’s a simple way to calculate the impact downtime has on your business:
1. Determine Total Downtime
- Formula:
Total Downtime hours = Planned Operating Time hours − Actual Operating Time hours
- Example:
If your planned operating time is 8 hours and the actual operating time is 6 hours, then:Total Downtime = 8−6 = 2 hours
2. Calculate Production Rate
- Formula:
Production Rate units hour = Total Units Produced/Planned Operating Time hours
- Example:
If you produced 100 units in the planned 8 hours:Production Rate = 100/8 = 12.5 units hour
3. Estimate Lost Units
- Formula:
Lost Units = Total Downtime hours × Production Rate units hour
- Example:
Using the previous examples:Lost Units = 2×12.5 = 25 units
4. Calculate Financial Losses
- Formula:
Financial Loss = Lost Units × Profit per Unit
- Example:
If your profit per unit is $10:Financial Loss = 25×10= $250
Important Note
This simplified method focuses on the core calculations needed to assess downtime costs effectively. While it may omit some detailed considerations like labor and material costs, it provides a quick and actionable way to understand the financial impact of downtime in manufacturing settings
Also Read: Replacement Cost: How it Works and Calculation Methods
Software to Minimize Asset Downtime
Fixed Asset Management software is essential for reducing downtime by helping you manage, monitor, and maintain assets effectively. Here’s how it works:
- Damage Asset Report
With the software, damaged or problematic assets can be quickly reported, complete with a full repair history. This enables you to identify issues early, track recurring problems, and take necessary actions to avoid future downtime. - Asset Activities Monitoring
The software allows you to monitor all asset activities in real-time, including updates on asset status and maintenance work. With QR code technology, asset details can be accessed and updated faster and more easily, helping you stay on top of any issues as they arise. - Mobile Accessibility
Accessing asset information isn’t limited to a desktop or PC. With the mobile app, you can manage your assets from anywhere, ensuring that you can quickly respond to downtime issues or maintenance needs, even on the go.
By leveraging these features, Fixed Asset Management software helps you maintain better control over your assets, reducing downtime and increasing operational efficiency.
Ready to Minimize Downtime and Optimize Asset Management?
Take the first step toward more efficient asset management with a free consultation and demo. Our team will walk you through how our Fixed Asset Management software can streamline your operations and reduce downtime.
Schedule your free consultation today and see how easy it is to take control of your assets!
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