Over 800K Identified in Lost Opportunity Cost

Sometimes we ignore persistent problems. If a fly is buzzing around your ear, you may swat at it in hopes it will fly off. But then, you begin swatting at it every day, after a certain point it becomes more efficient to buy a fly trap.

In manufacturing, instead of the problem being a minor nuisance like a fly, it's money that is slowly leaking out of your pockets. Then one day, you realize you've lost over 800k alone because you didn't buy the fly swatter in the first place.

Our customer was aware that their machine was inoperable due to it needing to meet HSE requirements as well as it needing calibration. A small maintenance issue, however in the hectic world of manufacturing, it didn't stand out as a priority, so when the issue was noticed, the machines status was set to machine down and it was put on back log.

However, losing $25K weekly tends to add up pretty quick. After nearly seven months of the machine being inoperable, the facility was able to identify $802,987.50 in lost opportunity cost.

Imagine you are handed that amount of money, and right before you take it, it's snatched away. You're told that this was the money you could've had, if only you'd have fixed the issue sooner.

When Auredia helped identify this lost opportunity, our customer realized the gravity of the situation, and prioritized getting the machine operational. Within a month, the lost opportunity cost reduced from a $25K weekly average, to $25K lost for the entire month, with the remaining months dropping even lower to an average of $3,325K a month for the remainder of the year.

After the bottleneck was resolved, they saw a 96.75% reduction in their total machine breakdown costs and regained production capacity.

It proves that sometimes the most expensive problems have the simplest solutions, and oftentimes it pays to just get the fly trap in the first place.