World's largest manufacturers lose $1.5 trillion a year to production outages

Senseye’s True Cost Of Downtime 2022 Report reveals that unplanned downtime costs manufacturers at least 50% more today than it did in the period 2019-20, due to spiralling inflation and production lines running at higher capacity. The cost of a lost hour now ranges from $39,000 for FMCG (fast-moving consumer goods) facilities to over $2 million in the automotive sector.

The cost of downtime has soared despite a 23% reduction in production line failures. Major manufacturers now experience 20 monthly unplanned downtime incidents per facility, six fewer than two years ago. But with each failure taking longer to recover from, they have only gained two additional hours of production capacity each month.

Senseye estimates unplanned downtime will cost Fortune Global 500 industrial companies almost $1.5 trillion this year, 11% of their annual revenues. Previous Senseye research from 2019 and 2020 put the cost to these companies at $864 billion a year, around 8% of turnover.

Robert Russell, CTO and co-founder at Senseye, comments: “It’s clear from our findings that downtime is getting more costly – much more costly. In every sector surveyed, an hour’s downtime costs significantly more than it did two years ago. This is a drag on profits that businesses can no longer afford to ignore.

“However, digitisation and predictive maintenance efforts are starting to have a significant impact, and most manufacturers have successfully reduced the number of incidents affecting production.”

Jim Davison, South of England region director at trade body Make UK. He said: “Inflation is a big factor. Goods cost more, so the value of those not made during downtime is greater, and with many factories operating at higher capacity there is less slack in the system to make up for lost time. The higher cost of energy, labour and materials wasted when production lines fail also contributed to a perfect storm of costly downtime challenges for major manufacturers.

“What is clear is that predictive maintenance can play a crucial role in reducing costs and boosting productivity. Especially when manufacturers need to use every tool at their disposal to meet the demands of an ever-changing industry.”

In terms of sector, adoption of predictive maintenance (PdM) has accelerated in automotive: the proportion of manufacturers with PdM teams increased from 11% to 38% in the last two years. More than half (60%) of FMCG manufacturers see PdM as a strategic priority now, and seven in ten already conduct some form of condition-based maintenance. The number of mining, metals and other heavy-industrial companies doing condition-based maintenance almost doubled in the last two years (to 89%), and the proportion with PdM teams increased from 13% to 35% as firms moved to limit their losses. The number of oil and gas companies with dedicated PdM teams increased from 29% to 38% over the last two years.