Hidden Factory Cost: Is There a Hidden Factory in Your Organization?

TI Executive Insights V3

Most organizations have some form of a Hidden Factory and being able to “see” these hidden factories in an organization requires learning to see what waste is and understanding that waste in any operation — service or manufacturing — can be a substantial drain on the bottom line, top line, on employee productivity, company shareholders and, most importantly, the customer.

Hidden FactoryThe Hidden Factory is where the largest amount of money, time and resources are spent that are considered waste across industries. The money spent in the Hidden Factory has the greatest negative impact on the competitiveness and profitability of a company.

With a more dramatic fine tooth comb, owners and executives are beginning to sift through their processes and discover the procedures leading to the deterioration of the company’s growth.

1. Over-Production: Producing more than is needed, faster than needed or before needed.
2. Wait-time: Idle time that occurs when co-dependent events are not synchronized.
3. Inefficient Transportation: Any material movement that does not directly support immediate production.
4. Processing: Redundant effort (production or communication) which adds no value to a product or service.
5. Inventory: Any supply in excess of process or demand requirements.
6. Motion: Any movement of people which does not contribute added value to the product or service.
7. Defect: Repair or rework of a product or service to fulfill customer requirements

By having the right people and processes in place, companies can begin to respond to market fluctuations with continuous improvements. By removing the redundant processes and maintaining a
streamlined approach to solving marketplace problems, a company is better prepared to handle the shifts in business and the economic environment.