“What Does One Hour Cost?”

A client recently asked one of my favorite supply chain questions: “How much does an hour of production downtime cost?”

This simple yet often overlooked question highlights an essential truth: a production system is an integrated network of processes that must work together to deliver results.

To answer, we built a cost model connecting key drivers:
⚙️ Labor cost: Think impacted headcount x hourly rate.
💸 Lost revenue: Delivery rate per hour x revenue per unit. Is it truly “lost,” or simply delayed, impacting cash flow?
🏭 Fixed costs: Facility rent, utilities, and overhead add up fast, especially when nothing is being produced.
⌛ Overtime recovery: Delays often lead to extra hours, snowballing all of the above costs.

The math revealed just how critical it is to minimize downtime and maintain operational flow. Contrast that with a Supply Chain executive I knew who intentionally tolerated “a healthy number of part shortages”—a mindset that drained money, morale, and time.

Are production delays costing your company more than you realize? Let’s work together to optimize your operations and push problems to the left, ensuring every part of your system works in harmony.