Understanding The Hidden Costs Of (Not Doing) Maintenance
Little or no maintenance contributes to equipment downtime and failure. As a result, organizations fail to meet their production quotas, directly hurting their profitability.
Regular maintenance guarantees overall equipment efficiency, ensuring that assets are fully available throughout the production cycles. Reliance on a run-to-failure strategy or deferring maintenance increases operational costs, safety risks and may render equipment irreparable. As equipment deteriorates, the efficiency of assets drops significantly. Companies must foot the heavy energy bills to support routine operations. Below are the imminent hidden costs resulting from poor maintenance.
1) Decreased or low-quality production
The preparation of production schedules depends heavily on the availability of assets. It is imperative to eliminate breakdowns or unnecessary downtime during peak production cycles. All production assets must operate at optimal efficiency. End products have to equally meet the minimum quality standards as dedicated by consumer or industry standards.
Failure to perform timely maintenance on equipment comes with adverse effects on the quantity and quality of products. Faults result in equipment malfunctioning leading to frequent production stops to perform emergency repairs. Organizations end up producing fewer units, failing to meet supply chain demands, signaling lower revenues. Companies incur extra costs to purchase replacement parts and pay overtime wages for technicians. Salvaging raw materials that were already transforming within the production line may be impossible, hence increasing production waste.
Production parameters such as pressure, temperature, or flow rates must be constant to attain the desired product quality. Other production assets operate within specific tolerance ranges. Failure to maintain production assets makes it difficult to control these parameters. It leads to the deformation of products, reducing their quality standards. Lower product quality is a matter that affects the reputation of a company, potentially leading to the loss of customers. The products may require rework, raising the production cost. Other products are sold at lower prices or disposed of as scrap material.
2) Poor safety standards
Routine maintenance guarantees the safety of production assets and facilities. It keeps assets in good working conditions, assures the safety of production teams, customers, and occupants minimize equipment failure, and controls the quantity of maintenance work.
Operating equipment for long without proper maintenance causes a pile-up of multiple faults that culminate in a breakdown. When this happens, there is a possibility of injury or death emanating from explosions, fire accidents, cuts or emission of toxic materials. There is an immediate spike in maintenance tasks, exposing the maintenance technicians to risky work environments.
During such instances, companies cater to medical bills and compensate staff members for their injuries. These costs sum up to thousands of dollars, yet simple routine maintenance can eliminate several safety risks.
3) Fines due to non-compliance
Businesses must adhere to different statutory regulations established by agencies like OSHA, EPA or FDA in their daily operations. They provide guidelines necessary for developing safe working facilities, controlling emissions and environmental pollution. Proper equipment maintenance improves the compliance of a company with these regulations.
Skipping maintenance reduces the efficiency of assets. They tend to be noisier, consume more energy or emit more pollutants. Government inspectors from the different agencies visit companies to verify compliance standards. Non-compliant facilities pay hefty penalties and fines. On top of that, they must perform costly corrective measures before embarking on their usual business operations. Those in serious breach of these regulations are bound to wind up their operations.
4) Higher replacement costs
Every asset has a rate of return that determines its profitability over its useful life. Extending the lifespan of critical production assets is possible through the execution of proper maintenance. Regular maintenance enables maintenance technicians to perform accurate condition monitoring by performing bearing lubrication , vibration analysis or thermography to protect expensive assets.
Extended operation without maintenance exposes equipment to premature or irreparable damage. At this stage, an organization can choose to retire the equipment or replace it with a similar one. Damaged assets will lie as idle equipment occupying valuable floor space, a costly affair as the company must cater for space rental or leasing costs and land rates payable to local governments.
The financial losses associated with premature retirement of equipment before its designed lifespan can be dire. Organizations will have to struggle between recouping initial investment costs and supporting business continuity. Replacing obsolete equipment comes with additional expenses to cover inflation, tax adjustments, and installation costs.
Organizations may consider maintenance as costly as they involve operations that recur. Deferring or avoiding maintenance may be an alluring step towards short-term financial savings that comes with dire long-term losses. As the efficiency of assets decrease, companies have to spend more time and engage more production personnel to combat the plunging production rates. Companies that want to retain a competitive edge, increase their earnings and improve their operational safety standards must establish and enforce a suitable maintenance strategy. Although the initial investment in technology solutions such as CMMS for maintenance may seem costly, the long-term benefits outweigh the risks of poor maintenance.
Bryan Christiansen is the founder and CEO of Limble CMMS . Limble is a modern, easy-to-use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.
It is self-evident that cranes and heavy equipment are indispensable in various industries such as construction, mining, rigging, and notably in hydrocarbon sectors. Consequently, property owners and contractors are required to adhere to high standards of maintenance, in accordance with OSHA guidelines, to ensure a safe working environment for all employees.