Whitepaper: What is the True Downtime Cost?
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Originally published: 08/12/2017 11:27
Publication number: ELQ-77146-1
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Whitepaper: What is the True Downtime Cost?

Whitepaper supporting the True Downtime Costs Analysis & the definition of indirect cost re Return on Capital Employed

engineeringequipmentlabourmanagementtdctrue downtime costwhitepaper

Description
To make more informed management decisions and therefore save more money in the long run, the key is to predetermine the real cost of downtime for every profit centre category.

True Downtime Cost is a way of analyzing the cost factors associated with downtime. The information gathered is then used for justifying costs and making daily management decisions.

It's likely that this data is being collected already in your facility, and now only needs to be gathered and organized according to the TDC guidelines.

Usually, managers make daily decisions regarding equipment downtime based on the cost of labour. Production demand is also important here too. It's only when the bottlenecks are taken into account that decisions are realized.

Some facilities disregard equipment as a bottleneck, like boilers, air compressors, and strappers in the warehouse. You should balance your decision making between TDC and production demand, not mainly direct labour cost and production demand.

The 'Overhead' bucket starts to become smaller and smaller when you start using the TDC methodology, making it more clear to everyone where the areas of opportunity are. It's becoming increasingly important to examine the TDC in its respective categories, not just so that you can identify the best opportunity, but also to benefit from the useful insight that using this methodology will provide. You'll soon see that a lot of the metrics related to cost savings bottom line improvement opportunities are far better than the labour category and the immediate (but temporary) gains you'll see from downsizing.

*Originally shared on industrial-ebooks.com*

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