Connected Worker/Published: June 8, 2023

The Hidden Factory: How to Find Your Hidden Inefficiencies

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Hidden factory

Since the dawn of the manufacturing age, process standardization has been the foundation of efficiency and profitability.  

However, in every plant lurks a shadow factory, where people are actually following hidden processes rather than the ones that have been so carefully developed and documented.  

In many cases it’s not deliberate. Work instructions may be out of date, or perhaps operators are using a workaround to address another underlying problem.  

At issue is the fact that these undocumented processes often actively undermine quality, safety, and efficiency.  

In this context, this article examines:  

  • How the hidden factory manifests in manufacturing plants 
  • How it affects your business  
  • How to find and fix hidden factory processes 

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What Is the Hidden Factory?

The hidden factory describes undocumented or non-conforming procedures in manufacturing plants that introduce variation into the manufacturing process. This variation can account for up to 40% of total plant capacity, according to late quality expert Armand V. Feigenbaum. 

Hidden factory processes include situations such as: 

  • Operators reworking parts at their station 
  • Speeding up cycle time when production falls behind 
  • Failure to perform preventive or autonomous maintenance 

The Hidden Factory: A Real-World Example

To picture how the hidden factory works, let’s look at a real-life example from an injection molding process. In this specific process, the part produced was a coolant overflow bottle. If the injection system didn’t work properly, the bottle wouldn’t eject correctly, bending the mating surfaces of the bottle used for mounting to the assembly.  

Here’s where the hidden factory came into play: 

The bent tabs would cause the bottle to not mount correctly, but operators didn’t know it was because of a problem with the ejection system. To ensure the parts weren’t rejected, they would just bend the tabs back with their thumbs.  

While this came from a good intention, problems could arise when a different operator was on the shift. Moreover, this undocumented process was hiding an unaddressed problem with the ejection system, one that could spell big quality costs for the company. 

How the Hidden Factory Affects Your Plant

The hidden factory can hit factories hard, often affecting overall equipment effectiveness through: 

  • Availability loss: Unexpected shutdowns can result due to problems like parts shortages, equipment maintenance or line stoppages when workers fall behind.  
  • Performance loss: The manufacturing line can become slowed down due to inexperienced operators, of if a machine has degraded over time and no longer meets its original cycle time.  
  • Reduced yield: Increased equipment downtime and slow cycle times mean fewer parts manufactured. Quality loss due to hidden factory processes also increases scrap, reducing productivity and revenue. 

There are also the hidden effects on safety to consider. Sometimes operators will use a workaround for safety procedures, for example if PPE is uncomfortable or if safety equipment isn’t working right. These unseen problems can lead to serious incidents that hurt workers and the company.  

How to Identify Hidden Factory Processes

Identifying your plant’s hidden factory processes is the first step to bringing them into compliance with established standards. Observation plays a key role, as well as analyzing metrics that point to hidden problems. 

For example, connected worker platforms that allow employees to log observations can be a powerful method for engaging frontline workers in reporting problems they see.  

Layered process audits are also an increasingly prevalent tool for uncovering hidden factory processes in manufacturing, providing daily opportunities to: 

  • Observe processes at the Gemba, or where the work is actually done 
  • Verify process inputs (e.g., the 6Ms) comply with standards 
  • Get feedback on why operators aren’t following standards 

Comparing performance metrics can also point to places where the hidden factory may be at work in your plant. Marked differences in cycle time between shifts, for example, often indicate where individuals are executing processes differently. From there, you might observe the work area, looking for bottlenecks or variation in process inputs.  

How to Fix the Hidden Factory

Fixing the hidden factory is no small task and requires a multi-faceted approach. Below we discuss several strategies for attacking the problem, including: 

  • Looking for small inefficiencies in a process 
  • Engaging your employees in quality 
  • Encouraging open communication 
  • Focusing on risk 
  • Streamlining the system 

Manufacturers can apply a variety of tools to the above strategies, such as Kaizen events focused on a specific problem or Gemba walks where management observes what’s happening on the plant floor. Layered process audits are another popular strategy, particularly in the automotive industry, as are connected worker platforms that help increase visibility into issues.  

Look at the Smaller Inefficiencies

One manufacturer had a single work cell creating a bottleneck on an assembly that was ultimately causing performance loss. Observation revealed that operators were first picking up two screws to hand start them, then reaching behind for a screwdriver to drive them to final torque. The connected worker screen was also behind the operator, forcing them to turn around to view the sequence of steps, torque achieved and module test results. 

Of course, nothing in the work instructions mentioned all these twists and turns, which only served to slow the process down. Solving the problem required just a few relatively simple hacks, shortening the process from 14 to ten seconds:  

  • Hanging the screwdriver on a traction system in front of the operator 
  • Installing a small stand for screws right next to the operator 
  • Mounting the connected worker screen in front of the operator 

Engage Your Employees

Frontline workers have a first-hand look into process inefficiencies and non-conformances, which is why engaging them is critical to finding and fixing the hidden factory.  

Connected worker platforms, for instance, provide tools such as: 

  • Digital work instructions to ensure operators follow the right sequence of steps 
  • A way for operators to record plant floor observations such as machine or safety issues 
  • The ability to send instant messages to team members when problems arise 

Mobile auditing tools, too, can help ensure process standardization and identify variation in high-value inputs such as operator behavior and machine settings. They also generate conversations about processes and quality, even uncovering insights from operators that can make processes more efficient. 

Remember that follow-through is essential to engaging employees. People won’t speak up if they see management is slow to fix problems, which also undermines credibility and buy-in for continuous improvement efforts. Making investments in quality may seem like a cost sink until you understand the cost of doing nothing. 

Encourage Open Communication

Fostering a culture of openness and communication is a necessary part of bringing to light where processes don’t conform to standards. One problem in many plants is that when problems arise, blaming and finger-pointing is the first response.  

Instead, leadership needs to recognize and communicate to the team that finding problems internally is the goal, because that’s what helps prevent them from reaching customers.  

Gemba walks and other plant floor checks, for example, can help normalize having open conversations about quality and safety. They also give frontline workers the chance to share their observations, concerns and ideas for improvement.  

Focus on Risk

Any number of hidden processes may exist in a plant, but which ones need to be fixed first? More than just inefficiency, companies should also focus on risk.  

In the context of the hidden factory, you want to look at where process variation has caused increases in KPIs like scrap or customer complaints. Pareto charts of process failures can provide important insight into your biggest risks, as well as layered process audit questions focusing on high-value process inputs.  

As you look to standardize processes, consider also whether you’re providing operators with information about the highest risk process elements. Digital procedure checklists, for instance, can be customized to the certification level of the operator. While a new operator may need to check off ten steps, a more experienced operator may only need three. Those three steps should be the ones most critical to quality or where known issues have occurred in the past.   

Streamline the System 

Streamlining the system is a way to proactively prevent hidden factory processes that hurt not just efficiency but also quality and safety. 

Consider the earlier example where operators initially needed to do a lot of bending and twisting to complete a process. Keeping people facing forward in what’s called the golden zone, as well as making the screws easier to grab, didn’t just increase efficiency. It also meant fewer defects. 

That’s because of one simple fact: 

Before rearranging the work station, the process required a greater number of steps. Fewer steps equals fewer  opportunities for problems, such as dropping screws into the assembly.  

Making Your Operations Efficient

Quality leaders must prioritize developing efficient processes, and just as important, making sure people adhere to those processes. Applying these strategies is a long-term effort requiring collaboration among multiple groups, an area where technology is helping companies make huge strides. 

However, it’s important to remember that establishing standard operating procedures (SOPs) is vital preliminary step, with everything else coming after. If your work instructions are insufficient, it’s impossible to expect people to audit against that standard, for example. Similarly, technology can’t fix insufficient standards, which are the foundation of quality. 

Once SOPs are in place, plants can use tools like connected worker platforms and mobile auditing to improve efficiency, standardization and visibility.

Download a free case study to learn how one global tire manufacturer used digital layered process audits to eliminate systemic quality problems

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