Have you identified the hidden forces that are draining your profits?
Sometimes manufacturers and service providers find themselves falling short on quality, delivery time and cost. Often, the reasons are not easily identified by managers or other higher-ups, and the cost of poor quality and inadequate performance simply continues to cut into profits and reduce competitiveness. Correcting mistakes, replacing defective products and compensating for inadequate customer service can multiply costly overhead as well as damage customer loyalty.
Take the following examples:
- A defective part causes failure on the assembly line; product replacement and lost productivity costs far exceeds the cost of the part.
- Redundant paperwork and inefficient process slow down product shipping resulting in delays.
- A worker is tired and goes home without conducting a crucial quality check; defective products get to customers resulting in investigation, replacement and reputational damage.
- A new hire is not properly trained or monitored; production time and costly materials are wasted through avoidable errors.
- Machinery breaks down due to improper use and neglect, causing excessive bills for maintenance and repair.
- An employee does not follow safety guidelines and is hospitalized with a resulting injury. This results in raised insurance premiums and extra wages to replace the injured worker.
These are all examples of what is termed “the hidden factory” (also “the hidden organization”) and refers to activities that cause costly waste and errors, and the resulting expenditure of energy to correct the lapses. Loss due to inefficiency can become so high that is described as a factory in itself, existing alongside the real one.
Lean Six Sigma focuses on identifying “hidden factory” activities to eliminate the root-causes. The process starts with questioning the status quo, a necessary first step to reduce waste and question inefficiencies that may have become so ingrained over time to have become invisible.
Using the Lean Six Sigma methodology will help you identify and dismantle your hidden factory and ensure it will never restart. Introduce Business improvement through Lean Six Sigma as a safe and effective way of maximizing your profits and customer satisfaction, putting the customer first. Take the wrecking ball to the hidden factory in your organization!
This material has been drawn in part from Schulich ExecEd’s upcoming program Masters Certificate in Lean Six Sigma – Black Belt (Oct. 19, 2018 – March 23, 2019 • 20 days over 5 months), which allows participants to drive continuous improvement to enhance performance, productivity and ultimately brand reputation with Six Sigma Black-Belt training.