Hidden Factory – What is it and how is it affecting your business?

Is your workplace home to its own ‘hidden factory’? In many complex and interdependent workflows between OEMs and tier suppliers, a proportion of work is conducted via a formal process. But as you will know, plenty of work is also conducted through informal channels, work-arounds and through personal relationships. This second category of informal activity represents the ‘hidden factory’ in your workplace.

What is a ‘hidden factory’?

A ‘hidden factory’ is a way of describing the informal and unofficial processes that take place between OEMs and tier suppliers that have complex and inter-dependent workflows. While approved working practices define how processes should systematically flow between individuals and organisations, often routine practice, personal relationships and ‘work-arounds’ mean that a significant degree of work is conducted outside of these formal policies and processes.

This unseen work that is invisible to formal processes constitutes the ‘hidden factory’. By its very nature, it is difficult to assess precisely how much work falls into the category of ‘hidden factory’ activity, but enforced changes caused by Covid-19 have revealed more informal work processes that most organisations believed to be the case.

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.

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.

Click the link to help us to measure the size and prevalence of informal working practices in your company by answering three simple questions.

Hidden Factories Survey

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