Last Updated on October 23, 2023 by Ossian Muscad
Every business, regardless of its size or industry, is susceptible to the menace of the hidden factory. This term refers to undocumented processes parallel to official procedures, often unbeknownst to management. These underground operations can significantly hamper the efficiency and quality of output, posing a formidable threat to the organization’s overall productivity.
The hidden factory frequently goes unnoticed, silently eroding profitability while creating a chasm between actual and potential performance. This article aims to shine a light on this clandestine operation, offering strategies to identify and rectify these insidious inefficiencies.
What is the Hidden Factory?
The Hidden Factory is a metaphorical term that describes the undocumented, often inefficient processes that run alongside an organization’s established, official procedures. It represents the shadowy operations, workarounds, and shortcuts employees resort to, whether due to outdated procedures, lack of knowledge, or attempts to address unseen problems.
The existence of a hidden factory is typically not a deliberate act of defiance; rather, it’s a symptom of systemic inefficiencies, miscommunication, or outdated instructions that have not kept pace with the evolving business landscape. The hidden factory often operates unnoticed, yet its impacts are detrimental. It compromises safety, undermines quality, and hampers efficiency, creating a productivity drain that managers struggle to plug.
How the Hidden Factory Affects Your Plant?
In a manufacturing environment, the hidden factory often manifests through several factors that negatively impact operational performance. These factors include availability loss, performance loss, and reduced yield. Two other significant impacts are quality issues and escalating operating costs. Let’s talk about each of these factors in detail:
Availability Loss
The hidden factory often leads to considerable availability loss. Availability loss is when the production machinery is unavailable due to unplanned downtime, repairs, and maintenance. These occurrences may often result from undocumented processes or workarounds that put additional strain on your machinery, leading to frequent breakdowns and excessive downtime.
Performance Loss
The hidden factory may also contribute to performance loss. Performance loss relates to the reduced speed of manufacturing processes or machinery due largely to hidden, inefficient processes. This decline in performance can lead to missed deadlines, decreased output, and, ultimately, lower revenues.
Reduced Yield
A hidden factory within your organization can directly result in reduced yield. The yield represents the amount of satisfactory product produced versus the total production. Hidden, inefficient processes can lead to increased wastage and rework, significantly reducing yield and impacting profitability.
Quality Issues
Quality issues often arise as a result of hidden factories. When employees follow undocumented processes, the consistency and standard of output can be seriously undermined. This can lead to the production of inferior goods, tarnishing your brand’s reputation and potentially losing customers.
Escalated Operational Costs
Lastly, the hidden factory can result in escalated operational costs. The additional time and resources needed to rectify errors, manage machine breakdowns, or retrain staff can inflate your overall operational expenses. This ultimately reduces profit margins and hampers the economic sustainability of your business.
Example of the Hidden Factory in Action
Consider a packaging company, for example. The official procedure for operating a specific piece of machinery might mandate monthly maintenance and the use of a particular type of lubricant. However, the machine operator has found that the machinery functions more smoothly when a different type of lubricant is used, and maintenance is carried out every three weeks.
The operator’s process, while not documented, has become the de facto procedure and is even passed on to new employees. This is a classic example of a hidden factory in action. Let’s break down the issues:
Inconsistent Procedures
The operator is not following the prescribed procedure, which can lead to inconsistencies in operation and potential quality issues. The different lubricants might cause unforeseen wear and tear, potentially shortening the machine’s lifespan.
Lack of Official Documentation
The operator’s preferred maintenance schedule and lubricant choice are not officially documented. If this operator leaves the company, the undocumented knowledge is left with them. This leads to a lack of continuity, increasing downtime, and process inefficiencies.
Increased Operational Costs
The more frequent maintenance schedule means the machine is unavailable more often than planned, leading to potential production delays and increased labor costs for the additional maintenance. The alternative lubricant may also be more expensive or need to be sourced separately, adding to operational costs.
Potential Safety Risks
Using a non-prescribed lubricant may also introduce safety risks not accounted for in the official procedure. This could lead to accidents, causing harm to workers and potential legal implications for the company.
By identifying this hidden factory, the company can assess whether the new process is more efficient or is causing more harm than good. It also underscores the need for regular process reviews and the importance of maintaining open lines of communication with all employees to ensure that hidden factories do not undermine the company’s efficiency and profitability.
How to Identify Hidden Factory Processes
Identifying hidden factory processes is essential to enhancing operational efficiency, improving product quality, and minimizing unnecessary costs. The following step-by-step walkthrough provides a systematic approach to uncovering these undisclosed processes that may be operating beneath the surface of your business.
Step 1: Encourage Open Communication
Begin by establishing an environment where employees feel safe to share their day-to-day work processes without fear of reprimand or judgment. Open communication is the key to uncovering hidden practices.
Step 2: Review Operational Procedures
Conduct a thorough review of all documented operational procedures. This allows you to understand the officially prescribed way of doing things and provides a benchmark against which actual practices can be compared.
Step 3: Observe and Document Actual Processes
Spend time on the shop floor observing and documenting the actual processes carried out by employees. This direct observation can often reveal discrepancies between the formal procedures and the actual way things are done.
Step 4: Conduct Interviews
Carry out interviews with employees across different roles and levels of the organization. This can yield valuable insights into workarounds and modifications to official procedures that constitute the hidden factory.
Step 5: Analyze and Compare
Analyze your gathered information, comparing the actual processes with the documented procedures. Identify areas of discrepancy where the hidden factory may be operating.
Step 6: Identify Root Causes
Once you’ve found the hidden processes, work to identify the root causes. Why are employees deviating from the prescribed procedures? Is it due to outdated instructions, inefficient processes, or lack of resources?
Step 7: Implement Solutions
Address the root causes identified in the step above. This might involve updating work instructions, improving process efficiency, or providing necessary resources. Ensure these changes are communicated effectively to all staff members.
Step 8: Monitor and Review
Keep a close eye on the implemented changes to ensure they are being followed. Conduct regular reviews of all procedures to ensure they remain current and effective, reducing the chance for a hidden factory to re-emerge.
By taking these steps, you can reveal the hidden factory processes within your organization, address them effectively, and pave the way for increased efficiency and quality in your operations.
How to Fix the Hidden Factory?
Now that you know how to identify the Hidden Factory within your organization, it’s time to address and fix these underlying issues. Addressing these hidden processes can lead to tangible improvements in operational efficiency, quality, and safety. Here are some practical tips on how to fix the Hidden Factory:
- Engage Employees: Employees are more likely to adopt changes if they are involved in decision-making. Include them in the process of updating work instructions and improving process efficiency. Their buy-in is vital to implement any changes successfully.
- Update Procedures: Many hidden factories exist simply because procedures have become outdated. Regularly review and update your standard operating procedures to reflect current best practices.
- Provide Training: Once procedures are updated, provide thorough training to all employees. This helps ensure everyone understands the new procedures and their importance.
- Create Clear Communication Channels: Establish clear lines of communication within your organization. Employees should be encouraged to report deviations from standard procedures without fear of retribution.
- Implement Regular Audits: Regular audits can help catch deviations from standard procedures before they become ingrained habits. These audits can also serve as a platform to recognize employees who consistently adhere to standard procedures, creating a positive reinforcement loop.
- Address Root Causes: It’s crucial to address the root causes of why employees are deviating from standard procedures. If the cause is inefficient processes or a lack of resources, consider investing in process improvement or resource allocation.
By implementing these steps, you can start to fix the hidden factory, reduce inefficiency, and enhance your organization’s overall performance.
Using Low-Code Platforms to Address the Hidden Factory
Modern technology offers a promising solution to counter the operational inefficiencies resulting from the hidden factory. Specifically, low-code platforms can play a vital role in identifying, addressing, and preventing hidden processes that undermine productivity.
Low-code platforms are software development tools that allow the creation of application software through graphical user interfaces and configuration instead of traditional hand-coded computer programming. They can be used to develop process-centric and data-centric applications with minimal coding, making them accessible even to non-technical users.
Detecting Hidden Processes
Low-code platforms can be equipped with process tracking features that monitor the activities within a manufacturing operation in real time. This can effectively detect discrepancies between documented processes and what’s happening on the shop floor, helping unearth hidden factory processes.
Addressing Inefficiencies
Once the hidden processes are identified, low-code platforms can facilitate the development of customized applications to streamline operations. This can range from improving existing processes to automating repetitive tasks and even creating new, more efficient workflows, thereby addressing the root causes of hidden factories.
Preventing the Emergence of Hidden Factories
Low-code platforms can also play a crucial role in preventing the emergence of hidden factories. They can help maintain updated work instructions, ensure effective communication across the organization, and enable regular audits of operational procedures. This can enhance transparency and adherence to standard procedures, minimizing the chances of a hidden factory re-emerging.
Organizations can combat the hidden factory effectively by leveraging low-code platforms, enhancing operational efficiency, and driving overall business productivity.
Make Your Operations Efficient with DATAMYTE
DATAMYTE is a quality management platform with low-code capabilities. Our Digital Clipboard is a low-code workflow automation software with a built-in checklist and smart form builder. This feature and its drag-and-drop interface allow you to create any checklist and form template you need—including work instructions for your shop floor processes and audits for regular review.
DATAMYTE also lets you conduct layered process audits, a systematic review of critical process steps. This auditing method focuses on the areas with the highest risk of failure or noncompliance. By conducting LPA using DATAMYTE, you can effectively identify and correct defects before they escalate.
With DATAMYTE, you have the perfect solution for promoting transparency, improving communication, and preventing the emergence of hidden factories within your organization. Book a demo today to learn more.
Conclusion
The hidden factory phenomenon poses a significant challenge to operational efficiency and quality control. Fortunately, there are solutions—utilizing modern tools like low-code platforms can help identify and mitigate these hidden processes. By fostering transparency and adherence to standardized protocols, businesses can enhance their productivity and maintain high-quality output while keeping the hidden factory at bay.
