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Frank Hill is the director of manufacturing business development for Stratus Technologies. |
A Greenfield Opportunity
Is unplanned downtime a way of life for manufacturers or a target-rich area for new lean initiatives?
Consider this: A survey conducted by IndustryWeek magazine of 500 subscribers (sponsored by Stratus Technologies) found that manufacturers had unplanned downtime an average of 3.6 times annually. Nearly one out in three experienced an outage in the first three months of 2012.
The survey also found that two out of three manufacturers have no strategy or IT solutions for high availability in their plants. The downtime-recovery choice for 64% of respondents is passive back-up, the least effective method shy of doing nothing at all.
In that same survey, respondents estimated their downtime cost per incident. The composite average was approximately $66,000 annually. For manufacturers with revenues above $1 billion per year, the average cost was more than $146,000 spread across an average of 4.5 annual downtime incidents.
In our experience, these average cost estimates are low, which often happens when you directly ask the question without additional probing into factors behind the answer. Many professional research firms and industry consultants do conduct in-depth analysis of downtime costs. Cross-industry estimates range from $110,000 to $150,000 per hour and higher for the average company.
A 2010 study by Coleman Parkes Research Ltd, on behalf of Computer Associates, pegged the average cost for manufacturing companies specifically at $196,000 per hour. That same research found that the average North American organization suffers from 12 hours of downtime per year with an additional eight hours of recovery time; numbers are slightly higher for European firms. Two thousand organizations participated in the survey.
