How To Find The Hidden Factory

LEAN TRAINING : 

5/20/2010 KCARC/Dove Manufacturing 1 LEAN TRAINING The “Hidden Factory”

The Hidden Factory : 

5/20/2010 KCARC/Dove Manufacturing 2 The Hidden Factory The Hidden Factory is where the largest amount of money, time and resources are spent that are considered “waste” . The money Spent in the Hidden Factory has the greatest negative impact on the competitiveness and profitability of a company.

THE HIDDEN FACTORY : 

5/20/2010 KCARC/Dove Manufacturing 3 THE HIDDEN FACTORY When we talk about the hidden factory, we are not just talking about the shop floor. We are talking about any place within any organization there is a “factory” or “operation” going on that has similar aspects to the shop floor in a manufacturing operation.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 4 The “Hidden Factory” The TRUE “Cost of the Hidden Factory” is usually underestimated in most companies. The “Hidden Factory” coexists with the actual, visual factory. The “Hidden Factory” is where most of the profit-reducers and waste exist

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 5 The “Hidden Factory” The “Hidden Factory” can be seen to those who look for it. It exists right in front of our eyes. Yet, most of us are blind to its existence and the “Hidden Factory” continues to eat profits; increase process times; create waste as we go about “business as usual”.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 6 The “Hidden Factory” Unless the “Hidden Factory” is exposed, it will continue to undermine our improvement program success; Impact our ability to satisfy your Customers (both internal and external Customers) Reduce our Competitiveness. Reduce our profits; Prevent our Team from achieving the WORLD-CLASS Performance results it could achieve.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 7 The “Hidden Factory” THE CHALLENGE FIND THE “HIDDEN FACTORY’ IN OUR ORGANIZATION; LEARN WHAT FEEDS IT; AND THEN GO BOLDLY AHEAD AND ELIMINATE THE “HIDDEN FACTORY” ONE STEP AT A TIME, USING THE TOOLS AND PHILOSOPHY OF LEAN MANUFACTURING (Eliminate Waste)

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 8 The “Hidden Factory” The amount of sales dollars that you have to have to “make up” the money that you spend in the “Hidden Factory” is usually not easily attainable and results in your losing money (profit) that impacts each and every one of your Customers; Team Members; Shareholders. It is better if you find ways not to spend money in the “Hidden Factory” in the first place than it is to “make up” for the money you spend.

The Hidden Factory : 

5/20/2010 KCARC/Dove Manufacturing 9 The Hidden Factory For Example, a simple waste calculator that can be used to show how much in additional sales dollars it would take to make up for the “waste” is a very simple but effective tool in showing people the true cost of “waste” Cost of Waste (Actual or Estimated)--- $10,000 Desired Profit Margin 5%= .05 Divide the $10,000 by .05 = $200,000 in additional sales or cost cuts to make up for that $10,000 in waste that was spent

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 10 The “Hidden Factory” That is why you hear so much talk about “doing the basics well” and “eliminating waste”. That is why it is so important to follow standardized work and established procedures. That is why everyone in an organization plays an important part in the overall success in finding the “Hidden Factory” and stop feeding it with money that can be spent better in other ways.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 11 The “Hidden Factory” The cost of a defect that is not detected until a process is completed is often 20-50 times the cost of finding the defect at its earliest stage.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 12 The “Hidden Factory” Example A missing nut on a sub-assembly part that is not caught before the part is put into a FG part. - Cost of missing nut= Pennies - Cost to replace scrapped part due to 1 missing nut- Many, Many times greater A “small” thing like 1 missing nut can often cause many, many more dollars than you planned for in your product cost.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 13 The “Hidden Factory” Example Excessive number of parts are dropped throughout the day and placed in the “scrap bins” Parts placed in the “scrap bins” are tossed away as scrap without being inspected to determine if parts are still usable. The cost of the individual part may be “small” but the cumulative effect of hundreds of parts being scrapped daily that are good parts actually costs thousands of $’s over the course of the year

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 14 The “Hidden Factory” Example Every shift, you get 2-3 parts scrap for the same defect on the same machine or part. You don’t search to find the “root cause” for the repeating scrap but accept it “as just a few parts” of scrap. Result 2-3 parts of scrap at every cell adds up to thousands and thousands of $’s.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 15 The “Hidden Factory” Example An Operator is tired and wants to get home. Instead of checking each part visually for the critical quality points, he doesn’t inspect the part to “save time”. Result A defective part gets to our Customer resulting in a Sort to be done and time to investigate the problem that costs you wasted dollars that could have been saved if the procedures had been followed.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 16 The “Hidden Factory” Example A Trainer doesn’t take the time to train a new person according to the training procedures. Result The new person creates scrap, rework and takes longer to become productive because you didn’t take the time to train them correctly from the start.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 17 The “Hidden Factory” Example Instead of trying to negotiate and find comparable products at a lower price, you continue to pay a higher price because it is “convenient’ or “you have always bought from this company”. Result You spend thousands of dollars more in expenses than we had to

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 18 The “Hidden Factory” Example A Forklift Driver doesn’t do his start of shift checks on the forklift to “save time” A forklift driver drives the forklift “fast” because he “is in a hurry”. Forklift repair expenses are excessive because the lifts are not properly or safely driven. Result Excessive dollars spent on forklift maintenance and repair

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 19 The “Hidden Factory” Example If each employee “wastes” just 5 minutes a day, this could add up to many $’s over the course of a year. This could be coming back 5 minutes late from a break; taking just “5 minutes longer than necessary to complete a job”. 5 minutes is less than 1% of the total time in a normal 8 hour shift. This little 5 minutes adds up to a total of over $100,000’s in money spent in the “Hidden Factory” over the course of a year.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 20 The “Hidden Factory” Example You have to work overtime in a department because you did not “control” the work during the regular shift hours. This could be a Team Member; a Parts Stocker; A Fork Lift Driver; a Team Leader; or a Office Support Person. Result You end up spending money on overtime for work that could have been performed during regular hours.

The “Hidden Factory : 

5/20/2010 KCARC/Dove Manufacturing 21 The “Hidden Factory Example You “rush” completing a project without getting input from all departments who are impacted by the project. Result You end up going back and having to “redo” the project which causes you to have to spend more time, materials and money than you would have had you planned and coordinated the project better.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 22 The “Hidden Factory” Example You have a non-production process where we do not set some “standard” or “expected level of performance” and you use more people to do the work than would be necessary. Result You pay more labor costs than would have been necessary because you did not monitor the work performance level.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 23 The “Hidden Factory” An Employee does not follow procedures to properly wear PPE. The Employee receives a laceration to the arm and requires going to the hospital; getting stitches; and being put on light duty for 2 days. Result $’s are spent to pay for the time away from work; someone filling in for the employee while at the hospital and when on light duty. This is waste.

The “Hidden Factory” : 

5/20/2010 KCARC/Dove Manufacturing 24 The “Hidden Factory” The bottom line of all these examples: There are hundreds of ways you can find “waste” in every department; in every process; in every action. It is everyone’s responsibility on the organizational Team to find the “Hidden Factory” in their area; expose it; and implement solutions that will eliminate the waste.