What does ‘hidden factory’ cost mean?

Hidden factories can be caused by either a reduction in quality or delivery within an operation that is allowed to continue (often as it isn’t visible) or by wasted output.

Wasted output refers to processes that are often not adhered to, routes to reach an end product or goal are not followed, creating a large amount of ‘work-around’. Huge amounts of time and therefore costs are buried with hidden factories, and this waste equals untapped capacity – what could be delivered if hidden factories were eliminated.

Companies are either not aware of this, and if they are then either don’t have an understanding of this cost or the ability or willingness to deal with it.

As this wasted output is ‘hidden’ and the cost not visible, a lot of companies don’t do anything about this apart from continuing to waste this output resulting in being either uncompetitive or not sufficiently profitable.

The COVID-19 crisis and the change in the working practices established since then have highlighted a number of inefficient processes in many organisations. 

We’d appreciate your help to assess how much of the work you do and the work conducted by your colleagues and partners in your supply chain falls into the category of a ‘hidden factory’ – and what you think about that. Considering your working environment, therefore:

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* 1. As a percentage, how much supplier / OEM interaction do you estimate happens outside of formal processes and tools?

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* 2. As a percentage, how much productivity would you estimate is lost in hidden factories between suppliers and OEMs?

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* 3. Were you aware of the theory around Hidden Factories, or has this survey helped you understand its meaning?

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* 4. If you would like to be entered into the prize draw for the chance to win a £100 Amazon voucher, please submit your contact details so that we can enter you into the draw.

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