Calculating the cost of process manufacturing equipment failures and how to reduce it.

(Peter Gagg, CEO, MCP Consulting Group Ltd).

In your company have you ever taken the time to calculate the cost to the business of equipment failures? Most companies haven’t or, if they have, they do nothing about it.

A good rule of thumb 

Taking the figure of £1,000 per hour as the total cost of downtime will give you enough incentive to take positive action. If you calculate the total downtime hours per year for each production line and then multiply by £1,000, the answer will be in six figures.

A recent example from the food industry can demonstrate this point

A food company operating 10 filling lines tracked the downtime due to all causes on each of the fillers for a period of 12 months; the results are shown in figure 1. The total annual lost output equated to 17,000 tons at a £1000 per tonne this equated to £17.0m!


annual lost hours
Figure 1 Annual Lost Hours

Using equipment performance data along with Root Cause Analysis improvements in performance and output can be achieved.

Case Study

In the above-mentioned food company, a twelve-week improvement project was set up involving maintenance and production staff with support from MCP. Analysis of existing maintenance data was followed by Root Cause Analysis (RCA) techniques to determine the causes of downtime and the root failure causes.

A deep dive analysis which identified the lines with the biggest losses – lines 1 and 2 – the action was then taken to understand the reasons for the high losses on these two fillers and to identify any common issues across all the ten fillers. Further analysis of the remaining fillers followed.

The result was a 25% reduction in downtime hours, which on an annualised basis equated to approximately 5,000 hours of extra production output, equivalent to an extra 3,750 tonnes of product at a sales value of £3.75m.

The number of breakdowns decreased over the full year as shown in figure 2; whilst the equipment reliability increased, shown in figure 3.

breakdown trend
Figure 2 Breakdown Trend

reliability trend
Figure 3 Reliability Trend

What is Root Cause Analysis (RCA)?

Before its current form as a widely used problem-solving method throughout all industries, RCA’s first appearance was in the field of engineering. The method is credited to the founder of Toyota Industries Co., Ltd., Sakichi Toyoda.

It is a process, which uses a variety of techniques to rapidly identify the true cause of any failure.

Root Cause Analysis in brief

RCA is typically used as a reactive method of identifying event(s) causes, revealing problems and solving them. The analysis is done after an event has occurred. Insights in RCA make it potentially useful as a pre-emptive method.

RCA is applied methodically to identify and correct the root causes of events, rather than to simply address the symptomatic result. Focusing correction on root causes has the goal of entirely preventing problem recurrence. Conversely, RCFA (Root Cause Failure Analysis) recognises that complete prevention of recurrence by one corrective action is not always possible.

Root cause analysis helps identify

  • What happened
  • How it happened, and
  • Why it happened

RCA should not be mistaken for Fault Diagnosis, which is the first level of investigation; for example, the line has stopped operating – the first step is to diagnose what has caused the line to stop; is it the motor, the gearbox, the power supply, a sensor, etc.

The next step is to use RCA to determine what has caused the failure. The two stages are not necessarily activated consecutively. The priority has to be to get the line going again.

The tools available to complete an RCA include Pareto Analysis, 5Ys, Fishbone Diagrams; Fault Tree Analysis; REM.

RCA can also be used to analyse historical failures that are either one-time occurrences or frequently occurring. Quite often frequent failures are not noticed for a variety of reasons such as:

  • People on different shifts have to deal with the same failures but there is no process for reporting them
  • People accept failures as part of the job
  • There is no process for the analysis of the work records in the Computerised Maintenance
  • Management System (CMMS) or the data is collected in such a way that does not allow for easy analysis and reporting.

The solutions to the above issues are:

  • Establish a common process for reporting all failures including failure, cause and action codes
  • Establish a Failure Reporting and Corrective Action System (FRACAS)
  • Specify and make available the right management information required from your CMMS to identify both one-off and repetitive failures
  • Use the CMMS to identify the top ten faults
  • Put in place preventative actions to eliminate the failure occurring in the future

MCP provide on-site analysis and support to improve production performance and equipment reliability. In addition, we offer City & Guilds certified training in RCA, Fault Finding and Maintenance Optimisation

For further details contact

As published in Process Industrial Informer