Intelligent Scaffolding is well aware of the importance of minimising downtime for our clients.
CEOs and CFOs know that interruptions in operations can have significant financial consequences for factories and industrial businesses. Even a short delay can lead to a massive loss of revenue, productivity and reputation.
But how bad can it be? To answer this question, we must examine the direct and indirect costs associated with downtime.
Studies have shown that, on average, a factory can expect to lose anywhere from 5% to as much as 20% of its productivity due to downtime. Furthermore, research conducted by Vanson Bourne found that 82% of companies that experienced unexpected downtime in the past three years had outages that lasted, on average, four hours. Around two million dollars were lost due to these unplanned interruptions. But how do they know it?
The True Cost of Downtime can be calculated using direct and indirect costs. The direct costs of downtime are relatively easy to calculate, but the indirect costs can be more challenging. Here is a step-by-step guide to help you figure out the TCD for your business.
The direct cost of downtime refers to the loss of production and revenue that occurs when a factory or industrial business is not operational. It can include raw materials, labour and equipment wasted when the operation was not running, as well as the cost of any potential damages to the equipment or facility. To calculate the cost of lost revenue, multiply the number of units of production lost during downtime by the selling price of each unit.
Imagine, for instance, that a factory produces 100 units of a random product per hour and sells each product for £100. It would mean that every hour of downtime costs the company $10,000 in lost earnings. This cost can quickly add up, especially if the shutdown is prolonged.
It’s equally important to calculate the cost of employee downtime. For example, if a company has ten employees, each earning £20 per hour, and they experience a 4-hour downtime, the cost of employee downtime would be: £20 per hour * 10 employees * 4 hours = £800.
These costs can include the loss of customer confidence, decreased employee morale and additional expenses related to fixing the issue that caused the disruption. For instance, if a company experiences downtime, its customers may begin to look for alternative suppliers, which can result in a loss of clients and reputation. Consequently, if the company loses two long-term customers, each worth £50,000 per year, there will be a loss of £100,000 in future business.
Additionally, employees may become frustrated and demotivated by the disruption to their work, leading to decreased productivity. Let’s say you have an employee who earns £20 per hour and works eight hours daily. The total daily cost of this employee would be: 20 * 8 = £160. Supposing this employee’s performance has decreased by 10%, the loss due to reduced productivity would be £16 per day.
Finally, there may be additional costs associated with repairing or replacing equipment and hiring temporary workers.
Once you have calculated the direct and indirect downtime costs, add them up to get your business’s True Cost of Downtime.
It is imperative to note that the cost of downtime can vary significantly from one business to another. This is due to factors such as the operation’s size, the equipment’s complexity and the cost of the raw materials and labour involved. By accurately calculating the TCD, businesses can better understand the impact of downtime on their bottom line and take steps to minimise it.
As a company that specialises in providing scaffolding solutions for factories and industrial businesses, Intelligent Scaffolding understands the importance of fast and reliable emergency services. Our team of experts is available 24/7. Whether it is an urgent repair, a scheduled maintenance job or an unexpected breakdown, we are here to help you reduce your True Cost of Downtime.
In addition to a fast response time, Intelligent Scaffolding is staffed by a team of factory and industrial specialists with years of experience. Whether you need a specific type of scaffolding, a particular application or a complex repair, our team has the knowledge and skills to do the job.
Finally, we also offer emergency out-of-hours call-outs, so you can rest assured that you will receive the help you need, even if it is outside of regular business hours. Our commitment is to provide you with a quote within just a few hours of your request. And if that wasn’t enough, our dedicated team will be on-location, ready to serve you the very next day.
Don’t let downtime disrupt your operations. Trust Intelligent Scaffolding to provide the fast, reliable and expert emergency services you need to keep your business running smoothly.
Contact us today.