Research indicates that unfilled technical positions have a significant impact on overtime, cycle time, and downtime. According to business studies, on average, these amount to 11% of earnings for a typical production facility.
Since most companies calculate overtime, we will start with that expense and its impact on ROI.
Estimate the average overtime for employees in production, maintenance, or skilled trades
Research has shown a 10% increase in overtime due to the skills gap. You can use that estimate, or enter in a different figure for your company’s overtime premium.
Annual Overtime Cost
This ROI calculation may be just the tip of the iceberg in the total cost of the skills gap for your business.
Downtime and cycle time are two hidden impacts from lacking the right workers in the right position. Consider the costs when higher setup or programming time reduces your efficiency. Or when a lack of skilled maintenance workers leads to machines going down longer and more frequently.
To get an estimate of the potential impact, start by entering your revenue.
10% Increase in Downtime
Research has shown a 10% increase in downtime due to the skills gap. Using the Overall Equipment Effectiveness calculation of Availability x Performance x Quality, a 10% increase in downtime leads to a 0.07% decrease in revenue.
8% Increase in Cycle Time
Research has shown an 8% increase in cycletime due to the skills gap. Using the Overall Equipment Effectiveness calculation of Availability x Performance x Quality, an 8% increase in cycletime leads to a 0.6% decrease in revenue.
TOTAL COSTS OF DOWNTIME AND CYCLE TIME
Although we aren’t adding this total of downtime and cycle time into the overall estimated ROI calculation for your company, you should consider these as “hidden” factors that are negatively impacting your bottom line.
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