Largest manufacturers lose $1.5 trillion a year to production outages
The cost of downtime to large manufacturing and industrial organizations has rocketed since 2020, according to a new report from Senseye.
Senseye’s True Cost of Downtime 2022 report reveals that unplanned downtime costs manufacturers at least 50 percent more today than from 2019-20, due to spiralling inflation and production lines running at higher capacity. The cost of downtime has soared despite a 23 per cent reduction in production line failures.
Senseye estimates unplanned downtime will cost Fortune Global 500 industrial companies almost $1.5 trillion this year, 11 percent of their annual revenues. Previous Senseye research from 2019 and 2020 put the cost to these companies at $864 billion a year, around eight per cent of turnover.
Jim Davison, South of England Region Director at Make UK says, “Inflation is a big factor. Goods cost more, so the value of those not made during downtime is greater, and with many factories operating at higher capacity there is less slack in the system to make up for lost time.”
“What is clear is that predictive maintenance can play a crucial role in reducing costs and boosting productivity. Especially when manufacturers need to use every tool at their disposal to meet the demands of an ever-changing industry.”
Heavy industries have been hit hardest by the rising cost of downtime, with average annualized losses increasing by 145 per cent to $128 million per facility over the last two years. This was the only sector to see outage times increase over the period studied, rising by nine per cent to 25 unplanned downtime hours per facility each month. The number of mining, metals and other heavy-industrial companies doing condition-based maintenance almost doubled in the last two years (to 89 per cent), and the proportion with PdM teams increased from 13 per cent to 35 per cent as firms moved to limit their losses
Rising prices contributed to a 76 per cent increase in downtime costs to large oil and gas firms in the last two years, with facilities averaging $149 million a year in outage-related losses. Digitization and PdM have helped limit losses, however, with oil and gas companies reducing the number of failures and the total amount of downtime by 25 per cent and 16 per cent respectively. The number of oil and gas companies with dedicated PdM teams increased from 29 per cent to 38 per cent over the last two years
This article is based on a report, The True Cost of Downtime 2022, by Senseye. To receive a copy, please visit senseye.io/downtime-report-download