It’s in every company’s best interest to avoid downtime as much as possible. Learn how much downtime could cost your business and how to prevent the issue.
by Scot Ranney • June 13, 2023
Downtime is one of the most dreaded words in business. Explore how much downtime can cost your company and discover helpful suggestions for preventing and reducing downtime.
What Is Downtime?
Before we get into costs and fixes, how is downtime defined? In business, downtime is any period at a company where production or work is halted due to equipment failure, natural disaster, or shortages of inputs like materials, labor, or power.
Basically, downtime is an unscheduled break from production or services where nothing can be done, and equipment and workers have to sit idly while the problem is fixed. The reasons for downtime vary, but the result is always a costly loss of production and work.
How Much Does Downtime Cost?
We’re all familiar with the adage that time is money, and downtime is lost time, which isn’t good for any company. The cost of downtime is different for each business depending on many factors, including the business’s size, the business model, overhead costs, and more.
For example, an e-commerce site and a physical store would both experience a negative impact due to downtime, but the effects on each would be noticeably different, especially if the e-commerce site were to go down and remain out of service for hours. On average, every minute of downtime is worth thousands of dollars. A simple formula for calculating how much downtime can cost your company is minutes of downtime x cost per minute = downtime cost.
How Do Companies Reduce Downtime?
Naturally, it’s in every business’s best interest to reduce and prevent downtime as much as possible. Two of the simplest but most effective strategies for reducing downtime involve frequently performing preventative maintenance and utilizing a vendor-managed inventory process.
Machine and equipment failure is one of the most common causes of downtime. While accidents and failures do happen, frequent preventative maintenance for integral equipment is the best way to prevent these costly issues.
Companies that utilize heavy machinery and equipment for production or basic tasks must be proactive in keeping their equipment running, instead of being reactive when things go wrong. A regular preventative maintenance schedule ensures all necessary equipment is in working order and uncovers preventable issues before they become failures.
Another useful tool for avoiding downtime is a vendor-managed inventory (VMI). VMIs ensure that companies with integral supplies and materials always have their items in stock, as inventory management is done by an outside source whose sole focus is managing the inventory.
A VMI ensures that companies never run out of stock or over-order their inventory and are left with added storage costs.
If you’re an industrial hose and parts supplier and think your company could benefit from a VMI process, contact The Hose Shop and ask our helpful staff about our VMI services.