At face value, the concept of downtime seems intuitive: when an unexpected problem arises in your supply chain operation, clearly there will be a bit of lost time and money spent resolving the issue. Makes sense. Too often however, managers perceive downtime as discrete events that are quick to occur and quick to resolve, failing to account for the true ramifications that downtime presents. This dilemma is most evident with forklift downtime, and specifically, forklift downtime that is unplanned.
Let’s begin with a few definitions:
- Planned Downtime – equipment that is intentionally scheduled out of service is said to be on planned downtime, usually for routine maintenance. Planned downtime is desirable and positive in a well-functioning organization, as it organically accommodates ongoing production needs by providing available fill-in equipment throughout the downtime window.
- Unplanned Downtime – equipment that is unintentionally forced out of service due to unforeseen circumstances is said to be on unplanned downtime, which is frequently the result of equipment problems, accidents, or similar issues. Unplanned downtime is negative and can be extremely disruptive to an organization, putting the business at considerable financial and operational risk.
- Operating Efficiency – to translate downtime into a material handling performance metric, let’s use operating efficiency since it’s a great proxy for overall operational health. Operating efficiency describes how well a business uses its resources (such as forklifts) to complete work. In turn, unplanned downtime can have tremendous negative impacts on operating efficiency caused by lost equipment capacity and failed missions.
- Operating Costs – as a core component of operating efficiency, operating costs are the combined fixed and variable costs that a business incurs while conducting daily work (such as payroll, consumables, utilities, expenses, debt repayment, supplies, and general overhead). Unplanned forklift downtime has the potential to negatively influence all forms of operating costs, making it a visceral threat to a company’s profitability.
With these definitions, we can derive a single conclusion that fleet and warehouse managers should take to heart regarding unplanned downtime: any time a forklift experiences unplanned downtime, many different aspects of a business must react and reallocate resources to fill the gap created, which drags down operating efficiency in ways that can be hard to rectify. The scale of these impacts quite often extends far beyond the immediate situation, regularly taking weeks or months to even fully recognize.
Specific Ways that Unplanned Forklift Downtime Impacts Operating Costs
When a forklift suffers from a sudden breakdown – for example, from a snapped mast chain or cracked hydraulic hose – operational impacts start piling up quickly in both direct and indirect ways.
Direct Impacts
Direct impacts are those that generate costs that must be spent on the people, equipment, and materials immediately involved in the breakdown, including:
- Mission Interruption – when unplanned forklift downtime strikes, it inevitably stops an active material handling mission dead in its tracks. To now complete this mission, additional resources and time will be needed, driving up overall mission costs.
- Sudden Repairs – forklift failures that result in unplanned downtime require urgent repairs, which will incur premium service costs due to expedited parts shipping and a higher after-hours rate for the help of a service technician.
- Extended Labor – once a mission is interrupted, additional labor costs are typically incurred to catch back up, either in the form of overtime or rescheduling the mission for a later date. In addition to the forklift operator, supervisors and other warehouse hands may be required to work extended hours as well.
- Replacement Equipment – if a facility does not have available standby forklifts that can be used, a rental replacement forklift is usually needed to take the impacted forklift’s place. In such situations, rental lifts often come at a premium cost due to off-route delivery fees.
Indirect Impacts
Indirect impacts are cost burdens that arise over time after a breakdown, involving secondary elements of the business that unfortunately often go unnoticed (also known as ‘knock-down effects’).
- Additional Freight Costs – when unplanned forklift downtime delays a shipment beyond its original freight window, additional freight costs are imminent. These costs might take the form of expedited shipping costs, direct delivery costs, delay penalties, and rescheduling premiums.
- Employee Behavior – the moment that warehouse staff expectations of consistent and reliable resources are unmet by unplanned forklift downtime, employee frustration and lack of confidence grow. These feelings lead to low morale, poor performance, and disregarded compliance, which all eat away at operating efficiency.
- Low Customer Satisfaction – here, the knock-down effects of unplanned forklift downtime really start to set in, beginning with declining customer satisfaction over missed deliveries and shipping delays. The cost of poor customer satisfaction can be tricky to quantify until lost revenue is apparent – a point you don’t want to be at.
- Degraded Reputation – reputational hits soon follow behind low customer satisfaction, today usually in the form of negative online reviews and inflammatory word of mouth. It only takes a few occurrences of unplanned forklift downtime to earn an organization the label of “unreliable”; a reputation not easily recovered from.
Three Facets of Avoiding Unplanned Forklift Downtime
After reviewing all of the above ways that unplanned forklift downtime impacts a material handling organization’s operating costs, the natural next question is: how can you eliminate unplanned downtime entirely? The answer is found in these three suggestions:
- World-Class Preventative Maintenance – the first way to completely eliminate unplanned forklift downtime is to establish a world-class preventative maintenance (PM) program for your fleet. To be world-class, a PM program must go far beyond simple maintenance schedules, instead employing a combination of predictive analytics and diligent inspections to properly determine necessary maintenance tasks and intervals down to each individual forklift.
- Advanced Fleet Management Technology – to facilitate the above predictive analytics element, telemetry and advanced fleet and warehouse management software provide automated avenues to determine forklift service needs. For example, Fairchild Equipment’s own Smart Fleet platform utilizes real-time equipment resource management tools to track forklift performance, ownership costs, and operational profiles that collectively provide input data for building predictive maintenance models.
- Built-In Operational Redundancy – sophisticated technology and planning aside, nothing beats having a backup readily available should unplanned downtime strike. Warehouse fleets should always have some degree of redundancy built in, which can include standby forklifts, ample spare parts, extra battery chargers, and where appropriate, flex operators that can jump in to fill urgent labor gaps. Businesses can directly own these redundant items or can partner with nearby forklift dealers for on-call, same-day parts and equipment.
We hope that this discussion has been helpful for your commercial material handling and operational needs. Fairchild Equipment is the Upper Midwest’s premier Material Handling Equipment and Service resource, with headquarters in Green Bay, Wisconsin, and numerous locations ready 24/7 to serve your needs throughout Wisconsin, Minnesota, North Dakota, Michigan’s Upper Peninsula and Northern Illinois. For more information or to discuss which equipment solution might be best for you, please call us at (844) 432-4724 or send us a message.
