Understanding the Real Cost of Unreliable Equipment

Jun 08, 2021 by Mark Dingley

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What makes equipment unreliable? That’s simple - if you can’t count on it to work when production is scheduled. Unreliable equipment has a greater cost in the manufacturing industry than just monetary – it can also affect brand reputation, customer relationships, workers and more.

Before making cuts to your maintenance budget or delaying the replacement of failing equipment, be sure to take a look at the total cost unreliable equipment has for your company:

Cost of Unreliability #1 - Downtime

Unreliable equipment can lead to downtime, which causes production to stop for an undetermined period – plus, this often occurs without warning. The true cost of a machinery breakdown has actually been estimated to be somewhere between 4 and 15 times the cost of maintaining it. For every second production is down, your company loses money – you may miss deadlines, which in turn has an impact on the rest of the supply chain, risking penalties and even customers.

Cost of Unreliability #2 - Excess Maintenance

Equipment that isn’t in good working order inevitably requires more maintenance than reliable equipment. Labellers, for example, may require printheads to be replaced more often. These sorts of costs can quickly add up (in terms of materials and labour), as it often takes workers away from more value-adding tasks. This results in lost profits.

Unreliable equipment

Cost of Unreliability #3 - Lost Production

This is also known as the income you could have made if the equipment hadn’t failed and production hadn’t been interrupted. This can mount up to thousands of dollars, depending on how long your equipment is down for.

Cost of Unreliability #4 - Equipment Repair

The fixing of equipment will mean that key staff or technicians are forced to stop what they’re doing and manage the issue. You need to order supplies, spare parts, tools and trained labourers – which can lead to unpredictable downtime. What this means is that the total cost of rectifying a breakdown is actually 3 to 5 times the cost of the same repair had it been performed in a more planned manner to prevent failure.

Cost of Unreliability #5 - Equipment Replacement

When dealing with unreliable equipment, you should also consider the likelihood of needing to replace it (when you least expect it). Replacement costs actually far exceed the total cost of routine maintenance – plus, you may not have budgeted for new equipment this financial year, which means that the money is going to need to come from other areas of your business (and that’s never a good thing).

Cost of Unreliability #6 - Sacrifice of Quality

It is important to consider the costs that occur when sub-quality products come off the line due to equipment failing (not including downtime where no products are being manufactured at all). This could refer to labels with barcodes that don’t scan, product codes and information that are illegible, checkweighers that let packaging pass with too much or too little inside, etc. Customer and consumer trust in your brand and products can be quickly destroyed by poor quality goods, as well as put you at risk of costly penalties and recalls. On top of this, there’s the added cost of reworking or even repackaging products to meet orders.

Cost of Unreliability #7 - Safety Risks

Have you considered that unreliable equipment can place your consumers and staff in danger? Inspection equipment that’s failing, for example, may let contaminants pass undetected, which puts consumers at risk. In high-pressure, breakdown situations, on the other hand, it is your staff who are put at risk. Safety is paramount for everyone – a reliable plant is a safe plant.

Cost of Unreliability #8 - Lost Business

Missed deadlines and poor quality products can actually lead to a very significant cost for your company – lost business. On top of industry association regulations, retailers of today face increasingly strict rules around the products they’re putting on their shelves. But how can you meet these demands when you’re using equipment you can’t rely on?

How do I avoid unreliability?

The best way is through preventative or planned routine maintenance – it is actually non-negotiable. The idea is to maximise your equipment’s performance by keeping it running as safely as possible for as long as possible, without the occurrence of costly and unplanned failures. The basic maintenance tasks required can be performed by operators, whilst routine inspections, services and tests can be performed by the provider.

Preventative maintenance can also help to pinpoint when equipment is about to fail, allowing you to schedule corrective maintenance repairs before it does. Matthews can provide preventative maintenance services that help you get the most from your labelling, coding and inspection equipment.

Another critical component is operator training. There are tasks that your staff can perform to ensure that your equipment runs to its optimum – this does, however, require the right training so that staff know how to properly conduct maintenance. There may be, for example, multiple steps involved or you might have new staff members who’ve never performed maintenance tasks before. Providers (like us at Matthews) can provide your staff with ongoing training.

Also consider the spare parts that you may need access to. Many breakdowns will require a part or module replacement – so ensure that you work with a provider who has local access to adequate spare parts, or even a spare machine.

Finally, you will need to evaluate if you need to upgrade your equipment or not. If the cost of maintenance is too high, you should consider swapping to a newer technology. Fortunately, there are trade out deals and rental or lease options to be taken advantage of.

Don’t risk unreliable equipment – be sure to talk to Matthews today.