This can be problematic when it comes to hidden factories, as, despite their costliness, they comprise dozens or hundreds of small inefficiencies. Companies like to throw their efforts behind solving big problems. “You change the way you measure things.”A few specific approaches to fixing hidden factories include: “That’s how you find the friction within your operations,” Carrier said. This slogan - more readily affiliated with political revolution than corporate cost-savings - is what informed the hunt for hidden factories. Rather, the company engaged with an effort to “reduce human struggle,” Carrier said. The core of this work was not a round of layoffs or a massive push for leaner production. The company searched for, found, and addressed inefficiencies manufacturing remains in Michigan. Leadership, though, was loath to abandon the Michigan communities in which the company had been rooted for almost a century. In the 1990s, furniture manufacturer Herman Miller was feeling squeezed to move factories overseas. Second, find places in the system where products and processes are stalled while waiting to move to the next stage. This hunt can be as simple as asking employees what causes the most stress in their job. First, find parts of a system that are under pressure, particularly time pressure. Third, study maintenance logs if deferrals are a constant issue and there is a large and growing backlog of maintenance, then somewhere a hidden factory is slowing systems down.Ĭarrier noted two other symptoms to look for when trying to find hidden factories. (Most firms Carrier has worked with run around 60-70% of orders on time prior to his intervention.) After that, look at which tasks get rescheduled and reprioritized and in what ways. Assess, for example, the timeliness of customer delivery. The trick to finding hidden factories is, in one sense, easy: look for missing time, Carrier said. In the ‘as is’ facility, hidden factories insert themselves into the plan, leading to constant rescheduling. “My first step is usually to meet with the schedulers, and ask ‘Are we planners and schedulers, or re-planners and re-schedulers?’ In the ‘as planned’ facility, you plan, schedule, and execute. Participants leave the course ready to implement a 90-day playbook for improving the resiliency of their organizations. Join senior lecturer John Carrier for Building Organizational Resilience: A System Approach to Mitigating Risk and Uncertainty, a live online course from MIT Sloan Executive Education. It then creeps into the architecture of the operations itself - as the enterprise resource planning systems are customized to accommodate the hidden factories, rather than used to eliminate them. A culture builds around them, with its own language: absorption costing, allowances, refactoring, reprioritization, etc. They result from an accumulation of many small extemporaneous changes. Finding what’s hiddenĪs the name suggests, hidden factories are difficult to see. Carrier, who works with companies to identify and deconstruct hidden factories, spoke with MIT Sloan to summarize best practices when approaching the problem. Nearly any type of work process in any industry can be scrambled by hidden factories. This dramatically reduces the productivity, profitability, and sustainability of an organization.įeigenbaum’s insight, it turns out, applies not only to traditional operations, but to manufacturing and product development across the world. Over time, these myriad workarounds become institutionalized processes as they were designed increasingly diverge from what happens in practice. In essence, when processes go wrong, people devise workarounds on the fly. “It was just people running around, random chaos.”įeigenbaum, an MIT Sloan alumnus, alighted on the term “ hidden factory” to describe what he saw. “Thirty percent of the activities he observed in the factory were unplanned, unscheduled, and didn’t serve the customer,” said John Carrier,a senior lecturer at MIT Sloan and an expert in systems dynamics. Armand Feigenbaum, author of “Total Quality Control,” found himself in a similar situation at a General Electric Co.
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