The True Cost of Downtime 2024: A Comprehensive Analysis
The in-depth report, published recently by Siemens, provides a detailed look at the escalating costs associated with downtime, driven by increasingly complex supply chains and rising energy prices, while also highlighting the significant savings potential offered by predictive maintenance (PdM) technologies.
KEY FINDINGS
Unplanned downtime is a severe financial drain for the world's largest companies. According to the report, the 500 biggest companies globally lose approximately $1.4 trillion annually due to unplanned downtime, equivalent to 11% of their total revenues. The automotive sector, in particular, faces the highest costs, with an idle production line in a major plant costing up to $2.3 million per hour. This notable increase from previous years reflects the sector's complex and interdependent supply chains.
Heavy Industry also faces substantial costs, with an hour of downtime now costing $59 million, 1.6 times higher than in 2019. In the fast moving consumer goods (FMCG) sector, costs have remained relatively stable, yet they still pose a significant financial burden. Rising energy prices have been identified as a critical factor driving the increased cost of downtime across various industries.
The report also explains how the spike in downtime costs has far outpaced inflation, particularly in the automotive and heavy industry sectors. For example, US price inflation from 2019 to 2023 was 19%, yet the cost of an hour's downtime in the automotive sector rose by 113% during the same period. This discrepancy is largely attributed to the global energy crisis, exacerbated by events such as the COVID-19 pandemic and geopolitical tensions, which have driven energy prices to unprecedented levels.
Complex supply chains in the automotive industry mean that downtime in one part of the process can have cascading effects throughout the entire production line and supply chain. This interdependency significantly amplifies the financial impact of downtime.
THE ROLE OF PREDICTIVE MAINTENANCE
PdM has emerged as a vital strategy for mitigating the high costs of unplanned downtime. PdM involves using advanced technologies to predict equipment failures and perform maintenance at optimal times, thus preventing unexpected breakdowns and reducing the need for costly scheduled maintenance. According to the report, nearly half of the firms surveyed now have dedicated PdM teams – this is double the proportion seen in 2019.
The adoption of PdM has led to a significant reduction in downtime incidents and hours lost. On average, plants now suffer 25 monthly downtime incidents, down from 42 in 2019. The average large plant loses 27 hours per month to unplanned downtime, a significant decrease from 39 hours in 2019. This reduction has been crucial in preventing the total costs of downtime from spiralling out of control.
RECOMMENDATIONS
The report makes several headline recommendations for manufacturers to continue mitigating the financial impact of downtime.
Siemens advocates for the broader implementation of PdM technologies across all manufacturing sectors. By leveraging AI-driven machine health monitoring, companies can save millions of hours in downtime and achieve significant cost savings.
Integrating IoT, AI, and other Industry 4.0 technologies is also highlighted as essential for effective condition monitoring and predictive maintenance. These technologies provide the rich data necessary for accurate failure prediction and maintenance planning.
Effective PdM requires comprehensive data collection from various sources, including maintenance records, operational systems, and manufacturing execution systems. Siemens also recommends that firms invest in the necessary infrastructure to gather and analyse this data effectively.
The report also highlights the unique challenges SMEs face in managing downtime costs. Siemens recommends that SMEs adopt digitalisation and PdM technologies to remain competitive and avoid unsustainable losses.
CONCLUSION
The 'True Cost of Downtime 2024' report underscores the critical need for advanced maintenance strategies and technological investments to mitigate unecessary costs. By adopting PdM and Industry 4.0 technologies, manufacturers can significantly reduce downtime incidents, enhance productivity, and achieve substantial cost savings. As the manufacturing landscape evolves, these strategies will be essential for maintaining operational efficiency and competitiveness within the sector.
