Equipment utilization is an important metric for organizations operating in asset-intensive industries like manufacturing, healthcare, logistics, and energy production. Usually expressed as a percentage, this metric can illuminate opportunities for improving operational efficiency, controlling costs, reducing downtime, and getting the most possible ROI out of your equipment.
In the guide that follows, we’ll discuss the value of the equipment utilization metric for improving on KPIs related to your operation’s efficiency, cost control, productivity, and ultimately, the effectiveness of your asset maintenance program.
Practical applications of the equipment utilization metric
In a practical sense, equipment utilization simply refers to how well your organization is managing and leveraging your equipment. Does your equipment support your production workflows with minimal disruptions or unexpected breakdowns? Are your critical assets operating to their fullest capacity and energy efficiency? Is your current workflow maximizing the potential output and profitability of your machinery?
The equipment utilization metric is designed to help you answer these questions, and to make adjustments to your processes and procedures where necessary. Asset-heavy organizations must typically apply this metric to a wide variety of assets including:
- Production machinery such as conveyor belts, robotic arms, presses, and assembly line equipment
- HVAC system components such as heating, ventilation, and air conditioning units
- Electrical system components such as generators, transformers, and circuit breakers
- Plumbing and water management systems such as pumps, water heaters, and filtration systems
- Construction vehicles such as forklifts, cranes, and automated guided vehicles (AGVs)
- Facility infrastructure such as elevators, lighting systems, security systems, and fire suppression systems
- IT hardware such as servers, user terminals, and communication tools
What is equipment utilization?
Equipment utilization is a metric that measures how effectively equipment or machinery is being used during its available hours. Equipment utilization is calculated by dividing the actual usage time of the equipment by the total available time (or potential operational time) of the equipment.
The resulting figure is expressed as a percentage out of 100%. A higher score is an indication of better and more optimal equipment utilization whereas a lower score suggests room for improvement.
We’ll explore the process of calculating equipment utilization in a subsequent section. But first, let’s consider some of the valuable insights provided by this metric.
A measure of your organization’s equipment utilization can provide insight into:
- Operational efficiency, with a higher utilization rate indicating that your equipment is being used efficiently and a lower utilization rate suggesting underlying issues like excessive downtime, improper operational scheduling, or underutilization due to process inefficiencies
- Capacity planning, with equipment utilization scores helping organizations make data-driven decisions about whether they need equipment upgrades, more optimal scheduling, or scaled labor to meet growing demand
- Maintenance program issues, with lower utilization rates serving as an indicator of excessive downtime due to malfunctions, breakdowns, and aging equipment
- Cost management, with optimal equipment utilization reducing per-unit production costs, helping to maximize ROI on critical assets, and sparing your organization unnecessary capital expenses for premature equipment replacement
- Process improvement, with equipment utilization scores helping to identify bottlenecks and process inefficiencies and offering insights into how best to channel improvement efforts
Why measure equipment utilization?
Equipment utilization is one of several valuable metrics that you can use to inform a more effective equipment management program. This score provides valuable data that organizations can use to optimize their operations, reduce costs, and improve overall performance. Below, we highlight some of the key benefits of calculating and analyzing utilization data as part of your equipment management program:
- Optimize asset usage by determining exactly how much time equipment is in use compared to its availability and identifying potential instances of underutilization and overuse.
- Align predictive maintenance scheduling with actual equipment usage to make better informed decisions about when to implement proactive maintenance tasks.
- Improve capital investment decision-making by investing in new equipment where utilization rates are close to 100% and deferring new asset procurement where utilization rates are low.
- Control operating costs by identifying underutilized assets that might be reallocated or retired to cut costs, as well as overutilized equipment that can be better managed to avoid costly breakdowns.
- Improve Overall Equipment Effectiveness (OEE) by tracking utilization alongside other factors that impact performance, and consequently gaining a holistic view of how well the equipment in question is performing.
- Measure progress by tracking whether improvements in process efficiency or maintenance practices are having a tangible impact on equipment utilization.
- Support sustainability goals by reducing unnecessary energy consumption to extend the life of assets and reduce the need for frequent replacement and excessive resource consumption.
How to calculate equipment utilization?
The equipment utilization metric is calculated by dividing the operating time of your equipment over a set duration by the total available time over that same duration. The resulting figure is then multiplied by 100 and represented as a percentage out of 100.
Equipment utilization formula
The formula for calculating equipment utilization is:
- (Operating Time/Total Available Time)×100=Equipment Utilization
- Where:
- Operating Time refers to the actual time during which the equipment is used for production or operations.
- Total Available Time refers to the amount of time the equipment is available for use, including both productive and idle time.
- Where:
Example of Equipment Utilization Formula
For example, if a piece of equipment is available for 24 hours in a day but is only used for 12 hours during that timespan, the formula would be expressed as follows:
(12 hrs/24 hours)x100=50
In this scenario, your equipment utilization rate would be 50%.
How do maintenance teams put equipment utilization ratios to work?
Equipment utilization is a valuable metric for maintenance teams and asset managers in a wide variety of industries. This measurement helps provide insights into the efficiency and performance of machinery and infrastructure in an array of asset-intensive industries.
- Manufacturing firms use the equipment utilization rate to ensure production machinery is operating efficiently, meeting production targets, and undergoing minimal downtime.
- Logistics operations use equipment utilization calculations to prevent overuse of warehousing equipment such as forklifts, conveyor belts, and automated guided vehicles (AGVs), and to consequently reduce wear and tear, prevent unplanned downtime, and lengthen the lifespan of these critical assets.
- Healthcare organizations use equipment utilization rates to monitor usage of vital medical equipment like MRI machines, ventilators, and diagnostic devices and consequently leverage this data to schedule predictive maintenance without disrupting patient care.
- Construction firms that rely on heavy machinery such as excavators, cranes, and loaders can monitor utilization rates to plan maintenance tasks and downtime for periods when critical equipment is not typically in use.
- Energy and utilities providers use heavy equipment such as turbines, generators, and transformers to facilitate consistent power generation and distribution, and may use the equipment utilization report to track performance, engage in predictive maintenance, and prevent costly outages.
What are the benefits of improving equipment utilization?
Tracking equipment utilization may be useful, but the real benefits of this metric come from a commitment to long-term improvement. Over time, improved equipment utilization can provide significant organization-wide benefits including cost savings, a reduction of unplanned equipment downtime, improved productivity, and more.
The following are some of the key advantages your organization may experience when committing to improved equipment utilization:
- Maximize production output through more optimal equipment usage.
- Reduce downtime caused by poor scheduling, inefficient workflows, or frequent breakdowns.
- Improve resource allocation by eliminating underutilized equipment and, consequently, reducing both idle time costs and capital expenditures on new assets.
- Lower maintenance costs through more optimal equipment usage and integration of predictive and preventative maintenance techniques.
- Prolong asset lifespan with more consistent, well-planned, and data-driven usage.
- Enhance production planning and capacity management by using improved utilization rates to better predict and manage changing production demands.
- Reduce energy consumption, lower fuel costs, and shrink your organization’s environmental footprint by optimizing equipment performance and condition.
How can businesses improve equipment utilization?
Now that you understand the benefits of improved equipment utilization, what steps must you take to achieve this improvement?
- Implement preventive maintenance (PM) techniques including PM scheduling, routine equipment servicing, and regular equipment testing.
- Integrate Predictive Maintenance (PdM) techniques including IoT sensors and real-time data to monitor equipment conditions (e.g., vibration, temperature, and wear) and predict when maintenance is required based on actual usage.
- Optimize equipment operator scheduling to reduce the impacts of both underutilized and overutilized equipment.
- Leverage advanced data analytics to identify patterns, inefficiencies, and opportunities for continuous improvement.
- Implement operator training programs covering proper equipment use, safety protocols, and basic troubleshooting skills.
- Utilize equipment performance benchmarks, (i.e. desired utilization rates, ideal downtime percentages, output performance metrics, etc.), compare your metrics with industry standards, and identify opportunities for improvement.
- Standardize operating procedures for equipment use to ensure consistency and reduce variability in how equipment is operated.
- Automate repetitive tasks and incorporate AI-driven technology to monitor equipment performance, identify utilization gaps in real time, and optimize equipment to run at peak efficiency.
Get more from your equipment with Limble asset management
Limble’s asset management platform is designed to help businesses maximize equipment utilization by providing the tools needed to effectively track, monitor, and improve how assets are used.
The following are among the key equipment monitoring features included in Limble’s state-of-the-art CMMS:
- Real-time asset monitoring gives you up-to-the-minute data on equipment performance, operating conditions, and usage patterns.
- Utilization reporting provides detailed insights into equipment utilization rates.
- Automated preventive maintenance scheduling plans out proactive maintenance tasks based on actual operating data.
- Predictive maintenance tools make it possible to analyze equipment usage and performance data in real time as well as more accurately forecast when maintenance will be needed.
- Work order automation streamlines the creation and management of maintenance tasks based on real-time equipment usage.
- Cloud-based mobile access lets operators and maintenance teams log equipment usage, report issues, and update work orders from the field as well as remotely.
- Robust asset tracking capabilities ensure that you know where every piece of equipment is and how it’s being used at all times.
With Limble CMMS, you’ll gain access to these features, and a heightened ability to track and improve equipment utilization. But you’ll also gain access to a host of other valuable functions including automated inventory management, compliance support, a customizable, user-friendly dashboard, and much more.
To find out what Limble CMMS can do to enhance your maintenance program and the efficiency of your operation as a whole, schedule your free demo today!
