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MAPP Plastics Discussion Forum

The MAPP Plastic Industry Discussion Forum allows members to rapidly communicate with each other. Post both questions and answers to questions that other MAPP members have about any industry topic from material and process issues to R&E Tax Credits and other business issues.

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Posted:  07 Jun 2016 22:33
GreenLeaf Industries is attempting to put a $/hr number on the cost of machine downtime.  We all feel that this is our biggest money waster, but we need to assign a hard number and track how much money we are wasting.  Has anyone done this before?  How did it work out?

Lawrence Segrest

Lawrence Segrest
Posted:  09 Jun 2016 17:19
Hi Lawrence,

About six months ago we started down the path of using OEE (Overall Equipment Effectiveness) as a metric, and we've found the data to be invaluable.  Email me if you'd like to learn more -  Here's a link that will give you the gist of OEE -
Posted:  09 Jun 2016 17:22
Lawrence - I view this issue as one of opportunity cost. If my pressing isn't running, it isn't making money. So, how you value that depends on two things - your capacity utilization and how you price your products. First, if you are running at full capacity, the loss of a machine is whatever profit it generates/hr. If you have open presses sitting and waiting, then the cost of downtime is much lower, since you can just move the job to another press. In that case, I would only charge the cost of downtime for the time wasted moving the job from one press to another.

How you value the time lost to downtime, in my view, depends on whether you include profit in the hourly shop rate you use to quote jobs. If yes, then that hourly rate is a good one to use. If your hourly shop rate includes labor, fixed OH, & variable OH only, then you may want to divide gross profit by actual press hours for the previous year (quarter, month, etc.)and add that your shop rate to get a fully loaded value/hour/press to assign to downtime. I hope that helps

Mike O'Connor
Innovative Components

Mike O
Posted:  16 Jun 2016 17:55
Erie - we are using OEE to get our downtime numbers,  I will be in touch to see if we can help one another improve.  Thanks for the suggestion.

Mike, I will try to tell you what I think you are saying... GreenLeaf is staffed for our current level of inefficiency.  Taking value add (sales less materials) and dividing it by total run time machine hours (productive or not) will give me our cost per hour of downtime.  As we become more efficient we can recover that loss by 1) reducing staff, or 2) producing more products without increasing staff.

Did I say that correctly?  Am I thinking correctly?


Lawrence Segrest
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